Which of the following statements best describes the relationship between ‘recession’ and ‘downturn’?

Question

BlackTom AI · Accepted Answer

The question asks: Which statement best describes the relationship between 'recession' and 'downturn'?

Option a: 'Downturns and recessions both have a positive relationship with economic growth.' This is incorrect because both downturns and recessions are associated with declines in economic activity, not increases; the phrase 'positive relationship with economic growth' is misleading in this context.

Option b: 'Downturns and recessions have alternating periods of falling economic growth. All periods of downturns will lead to a recession.' This is not accurate: while a recession is a more severe, prolonged downturn, not every downturn necessarily progresses to a formal recession (which is defined by two consecutive quarters of negative growth in many definitions). The statement also implies a guaranteed progression from downturn to recession, which is false.

Option c: 'A recession is a severe downturn, during which economic growth is negative for two quarters.' This correctly captures the standard definition used in many economic contexts: a recession is a significant decline in economic activity lasting for at least a period equivalent to two consecutive quarters of negative GDP growth. The wording reflects the typical benchmark used in simple explanations.

Option d: 'Downturns and recessions have an inverse relationship. When downturns are greater, recession will be smaller.' This is incorrect because downturns and recessions are not described as having an inverse relationship; a downturn is a broader term for a decline in activity, while a recession is a specific, more severe, and formalized phase of that decline. The idea that a larger downturn would imply a smaller recession is logically inconsistent with standard economic definitions.

In sum, option c correctly delineates a recession as a severe downturn characterized by two consecutive quarters of negative growth, whereas the other options misdescribe the relationship or the nature of recessions.

Which of the following statements best describes the relationship between ‘recession’ and ‘downturn’?

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Which of the following statements best describes the relationship between ‘recession’ and ‘downturn’?

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类似问题

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