What is a recession?

• A. A period of rapid growth
• B. A sudden spike in prices
• C. A steady decline or receding of the economy for at least six months
• D. Full employment

Answer: (C)

A recession is a stretch of time when economic activity is shrinking across multiple parts of the economy for a sustained period. It’s not about one bad quarter or a single price change, but a downturn you can see in several indicators—GDP, employment, production, incomes, and spending all slowing down together. The idea of “two consecutive quarters of negative GDP” is a common shorthand, roughly six months, to describe this ongoing decline. So the option that talks about a steady decline in the economy for at least six months captures the real sense of a recession. The other ideas describe growth, price increases, or full employment, which are the opposite of a downturn.