A recession is best described as
a. two quarters of negative growth of real GDP.
b. a significant decline in economic activity that is spread across the economy and lasts more than a few months.
c. a period when unemployment is high and rising.
d. a period when inflation is high and rising.
b. a significant decline in economic activity that is spread across the economy and lasts more than a few months.
The first month of a recession is the month
a. following the trough.
b. following the peak.
c. before the peak.
d. before the trough.
b. following the peak.
The best description of a recession is:
b. a significant decline in economic activity that is spread across the economy and lasts more than a few months.
While option a (two quarters of negative growth of real GDP) is commonly used as a general rule of thumb in defining a recession, it is not the only criteria. A recession is typically characterized by a broader decline in economic activity, including factors beyond just GDP. Moreover, a recession may extend for more or less than two quarters. Therefore, option b is a more encompassing and accurate description of a recession. Option c (a period when unemployment is high and rising) is often a consequence of a recession and is not a defining characteristic. Option d (a period when inflation is high and rising) is not typically associated with a recession, as recessions are often accompanied by lower inflation or even deflation.