The C. contraction phase in the business cycle is a period when the level of business activity declines and GDP falls.
Out of the four business phases that make the business cycle, the phase of the contraction of business is the one in which the business experiences a gradual slump in the overall commerce associated with the business. In this phase, the growth and the employment declines.
This phase is usually followed by the peak phase (the phase in which the business is giving the best output and full employment). The first phase is expansion and the last phase is trough.
