What characterizes the recession phase in an economy?

The recession phase in an economy is characterized by two successive quarterly declines in GDP. This definition aligns with the commonly accepted criteria for a recession. A recession is typically recognized after an economy experiences a sustained period of economic downturn, which is evidenced by a contraction in GDP over at least two consecutive quarters.

In the context of economic analysis, GDP, or Gross Domestic Product, is a critical indicator of economic health, reflecting the total value of all goods and services produced in a country. A decline in GDP implies that the economy is shrinking, leading to reduced consumer spending, lower business investment, and possibly rising unemployment rates.

The other options provided do not describe a recession accurately. A single quarterly decline in GDP, while potentially indicative of economic issues, does not meet the standard definition of a recession. Stable business investments and growth in durable goods sales typically indicate economic stability or growth, rather than a recession. Therefore, the criterion of two consecutive quarters of declining GDP is the defining characteristic of a recession.