ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a reduction in real GDP over two successive quarters
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a reduction in real GDP over a whole year
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a reduction in nominal GDP over two successive quarters
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a reduction in nominal GDP over a whole year
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Detailed explanation-1: -The most common definition of recession used in the media is a ‘technical recession’ in which there have been two consecutive quarters of negative growth in real GDP. This definition often appears in textbooks and is widely used by journalists.
Detailed explanation-2: -A recession is a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession, but many use more complex measures to decide if the economy is in recession.
Detailed explanation-3: -What is a recession? While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle.
Detailed explanation-4: -The point at which an expansion ends and a recession begins is called the peak of the business cycle. Real GDP then falls during a period of recession.