A recession is a decline in
A) the inﬂation rate that lasts six months or longer.
B) the unemployment rate that lasts six months or longer.
C) real GDP that lasts six months or longer.
D) potential GDP that lasts six months or longer.

Question

Quizplus · Accepted Answer

A recession is commonly defined as two consecutive quarters, or six months, of a decline in real GDP. Option A is incorrect because a decline in the inflation rate is not necessarily indicative of a recession. Option B is incorrect because while high unemployment is often a symptom of a recession, it is not the defining characteristic. Option D is incorrect because potential GDP is not directly observable and therefore cannot be used to officially determine a recession.

A Recession Is a Decline in