Suppose the National Activity Index of the Federal Reserve Bank of Chicago hovered around +0.25 for a few months but then dropped to -1.5 in November. Which of the following is the best interpretation of this finding?
A) The economy grew at a rate of 0.25% for a few months, but economic growth actually decreased by 1.5% in November.
B) The rate of economic growth slowed in November, but the economy did not move into a recession.
C) The economy was in an expansion in October but moved into a recession in November.
D) Economic activity was above the historical trend rate of growth, but it is likely that the economy moved into a recession in November.

Question

Quizplus · Accepted Answer

The National Activity Index indicates economic activity relative to trend. A drop from +0.25 to -1.5 suggests a significant decline, likely indicating a move into recession.