The contraction phase of the business cycle involves economic slowdown, reduced employment, and lower prices. GDP at market prices reflects the total value of goods and services produced, including taxes but excluding subsidies.
During the contraction phase of the business cycle, the economy experiences a slowdown in economic growth, a decrease in employment, and a decrease in prices. This phase is marked by a decline in real GDP, rising unemployment rates, and reduced consumer spending. An example of this is the 2008 financial crisis when many businesses faced closures, leading to a significant economic downturn.
Gross Domestic Product (GDP) at market prices refers to the total monetary value of all final goods and services produced within a country's borders over a specific time period, including taxes and excluding subsidies. Market prices factor in the actual prices paid by consumers, including any indirect taxes or subsidies. For instance, if a country's GDP is $10 trillion at market prices, it indicates the total value of goods and services produced, excluding intermediate goods but including indirect taxes such as sales tax.
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