A recession is deﬁned as a period in which
A) cost-push inﬂation is present.
B) nominal domestic output falls.
C) demand-pull inﬂation is present.
D) real domestic output falls.

Question

Quizplus · Accepted Answer

A recession is characterized by a decrease in real domestic output, which means a decline in the total production of goods and services in an economy. Option A refers to a situation where prices rise due to an increase in production costs. Option B refers to a decline in the nominal value of goods and services produced, but it does not necessarily indicate a recession as it could be due to inflation. Option C refers to a situation where prices rise due to excessive demand. Only option D correctly describes a recession.

A Recession Is Deﬁned as a Period in Which