Suppose the Federal Reserve Bank of Chicago's National Activity Index drops to -0.83 this month after being above +0.36 for the previous three months.This movement in the index indicates that:
A) the economy has probably moved into a recession.
B) the rate of economic growth has slowed,but not enough to suggest that a recession is imminent.
C) the rate of economic growth has dropped below the historical trend rate of growth,and the economy has reached a trough.
D) the economy is at its peak this month but will move into the recession stage in the near future.

Question

Quizplus · Accepted Answer

A drop in the National Activity Index to a negative value suggests that economic activity has decreased significantly. When this happens, it is likely that the economy is entering a recession.