Identifying Economic Downturns

Steps:

• Recognize that negative economic growth means a decline in GDP over time.
• Note the timeframe: two consecutive quarters of decline.
• Recall standard economic definitions for periods of contraction.
• Match the description to the term for such a downturn.

Why C is correct:

• A recession is defined as two consecutive quarters of negative GDP growth, indicating a broad economic slowdown.

Why the others are wrong:

• A. Budget deficit refers to government spending exceeding revenue, unrelated to overall growth.
• B. Inflation is a sustained rise in price levels, not a decline in output.
• D. Trade deficit occurs when imports exceed exports, which doesn't define growth contraction.

Final answer: C