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What is contraction?

Contraction in a business context refers to a period of economic decline or slowdown. It is a phase in the business cycle where the growth of a company or economy slows, stalls, or shrinks.

During a contraction, companies might see a decrease in their sales, profits, and cash flow. This could lead to cost-cutting measures, layoffs, and a decline in overall business activity. Understanding the signs of contraction can help companies plan and prepare for economic downturns. Being able to adapt during periods of contraction is crucial for long-term success and survival in business.

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