A recession occurs when an economy experiences a period in which there is A. a decrease in the inflation rate. B. a decrease in total production. C. an increase in total employment. D. a negative amount of net exports. The business cycle exists because A. exports and imports do not always increase and decrease at the same rate which causes cyclical movements in net exports. B. the price level tends to increase over some periods and decrease over others. C. there are changes in the level of government expenditures, sometimes they increase and sometimes they decrease. D. total production experiences periods of increases and periods of decreases. Click to select your answer.

According to economists, a recession is a two-consecutive quarterly periods of economic decline, as represented by GDP. In other words, if GDP falls for six consecutive months, we have a recession. And GDP is a measure of the total production of a particular region in a given period of time.

The business cycle exists because - D. total production experiences periods of increases and periods of decreases.

The business cycles refers to the cyclical nature of the periods of growth, and degrowth of total production of GDP. This means that it is natural and expected for total production to grow in some periods of time, and to fall in other periods of time, which affects firms and individuals accordingly: when GDP grows, firms produce more, hire more people, and incomes rise, when GDP falls, firms produce less, lay off people, and incomes stagnate, or go down.