During a recession, what is generally observed regarding GDP?

During a recession, the economy is characterized by a significant decline in economic activity across the economy that lasts for an extended period. One of the primary indicators used to identify a recession is Gross Domestic Product (GDP). When a recession occurs, GDP typically contracts, meaning that the total economic output decreases.

The correct choice highlights the fact that a recession is often defined by two consecutive quarters of negative GDP growth. This measurement underscores the severity and duration of the economic downturn. The consecutive quarters of declining GDP indicate a consistent and profound reduction in economic productivity, consumer spending, investment, and overall economic health.

Understanding this pattern is crucial for recognizing the economic climate and anticipating governmental and monetary policy responses aimed at stimulating growth during such periods. In contrast, the other options do not align with the established economic definitions and observations related to GDP during recessions.