Economic recession is

• A. A rapid growth period
• B. A period of high inflation only
• C. A moderate but sustained downturn in the economy
• D. An uptick in stock prices

Answer: (C)

A recession is a period when overall economic activity slows down across the economy for an extended time. You see it in shrinking output (GDP), higher unemployment, and softer spending and production for several months. Describing it as a moderate but sustained downturn captures both the decline in activity and the duration, which are the key ideas behind a recession. It’s not a rapid growth period—that would be an expansion. It isn’t just high inflation, since inflation is about rising prices and isn’t the defining feature of a recession. And an uptick in stock prices isn’t a reliable signal of a recession, because stock markets don’t always move with the real economy.