What characterizes an economic recession?

An economic recession is characterized by a significant decline in economic activity that persists for an extended period. This decline is typically measured by factors such as gross domestic product (GDP), employment rates, consumer spending, and industrial production. During a recession, there is generally a noticeable contraction in the economy, which leads to reduced business revenue, layoffs, and decreased investment.

This downturn affects multiple sectors, resulting in lower consumer confidence and spending, which further exacerbates the economic decline. Recessions often last for several months or longer and can have far-reaching effects on businesses and households. Understanding this definition helps to clarify why the other options do not accurately describe a recession, as they refer to more positive economic conditions or temporary fluctuations rather than a prolonged decline in economic activity.