Which of the following quarterly real GDP scenarios would be considered a recession?

• A. Real GDP fluctuates but ends higher after two quarters.
• B. Real GDP remains unchanged for two consecutive quarters.
• C. Real GDP increases for two consecutive quarters.
• D. Real GDP decreases for two consecutive quarters.

Answer: (D)

Verified step by step guidance

1. Understand the definition of a recession in macroeconomics: it is commonly defined as a period of at least two consecutive quarters of negative real GDP growth.
2. Analyze each scenario by checking the direction of real GDP change over two consecutive quarters.
3. For the first scenario, where real GDP fluctuates but ends higher after two quarters, note that the overall trend is not negative for two consecutive quarters, so it is not a recession.
4. For the second scenario, where real GDP remains unchanged for two consecutive quarters, there is no negative growth, so it does not meet the recession criteria.
5. For the third scenario, where real GDP increases for two consecutive quarters, this indicates economic expansion, not recession.