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In the first quarter of the year, Real GDP was $400 billion; in the second quarter...

In the first quarter of the year, Real GDP was $400 billion; in the second quarter it was $398 billion; in the third quarter it was $399 billion; and in the fourth quarter it was $395 billion. Has there been a recession? Explain your answer.

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Answer #1

A recession is said to be occurred when there is decline in GDP for two consecutive quarters ( i.e six months). If the GDP declines in the first quarter and again in the second quarter, it is considered to be recession.

In the first quarter the GDP was $400 million in the second quarter it was $398 million, in the third quarter the GDP is $399 million (GDP increased by $1 million), in the fourth quarter again GDP declined to $395million. There was no decline in GDP in the two consecutive quarters. Hence this change is not considered to be recession.

Answer: There has been no recession.

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