During the past two quarters real GDP has fallen by 1.5 percent and the unemployment rate has increased by 1 percentage point. Economists predict that during the next quarter unemployment will rise by another percentage point. The economy is most likely:

Question

Quizplus · Accepted Answer

A fall in real GDP and an increase in unemployment indicates a contraction or a recession. The prediction of further unemployment increase in the next quarter confirms this. Therefore, the economy is likely in a recession.

During the Past Two Quarters Real GDP Has Fallen by 1.5