The Business Cycle Dating Committee defines a recession as
A) two consecutive quarters of declining real GDP.
B) two consecutive quarters of declining nominal GDP.
C) a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months.
D) a significant decline in inflation and unemployment lasting more than a few months.
Answer: C
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Real GDP can increase either because the quantity of labor increases or because labor productivity increases. What is the effect on the standard of living if real GDP increases because
a. the quantity of labor increases? b. labor productivity increases?
In the above figure, point B depicts
A) an inflationary gap with real GDP in excess of potential GDP. B) an inflationary gap with real GDP less than potential GDP. C) a recessionary gap with real GDP in excess of potential GDP. D) a recessionary gap with real GDP less than potential GDP.
Goods having a negative calculated income elasticity are
a. superior goods b. producers' goods c. nondurable goods d. inferior goods e. none of the above
Is it ever rational for unions to strike if they know that their members will never be able to make up for the wages they lose during the strike? Explain