During periods of contraction, more people are out of work and demand for goods and services tends to fall, so there is more pressure for rising prices.

Question

Quizplus · Accepted Answer

During periods of contraction, or a recession, demand for goods and services tends to fall, which can put downward pressure on prices rather than causing them to rise. Additionally, with more people out of work, there may be less money circulating in the economy, further contributing to the downward pressure on prices.

During Periods of Contraction, More People Are Out of Work