Exhibit 7-4

-Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition)in 2012?
A) Yes, because Real GDP declined during two consecutive quarters in 2012
B) No, because Real GDP did not decline during three consecutive quarters in 2012.
C) Yes, because Real GDP was lower at the end of the year than it was at the beginning of the year.
D) This information cannot be determined because the determination of a recession is based upon GDP not Real GDP.

Question

Exhibit 7-4
 
-Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition)in 2012?
A) Yes, because Real GDP declined during two consecutive quarters in 2012 
B) No, because Real GDP did not decline during three consecutive quarters in 2012. 
C) Yes, because Real GDP was lower at the end of the year than it was at the beginning of the year. 
D) This information cannot be determined because the determination of a recession is based upon GDP not Real GDP.

Quizplus · Accepted Answer

A recession is typically defined as a decline in Real GDP for two consecutive quarters, which is the case in Country A based on the chart provided. Option B is incorrect because the standard definition of a recession only requires two consecutive quarters of decline, not three. Option C is incorrect because while Real GDP did decline from Q1 to Q4, that alone is not enough to determine a recession. Option D is incorrect because Real GDP is a measure of GDP adjusted for inflation, and is commonly used in the determination of a recession.

Exhibit 7-4 -Refer to Exhibit 7-4. Did Country a Experience a Recession