Canada’s economy didn’t grow at all last quarter and shrank in December, new GDP numbers show. According to the news article, was Canada in a recession at the end of 2022? A. not in a recession because the inflation rate was falling. B. in a recession because real GDP didn’t grow in the last quarter. C. not in a recession because real GDP growth wasn’t negative in the last two quarters of 2022. D. in a recession because real GDP growth was negative in December 2022.
The correct answer and explanation is:
The correct answer is C. not in a recession because real GDP growth wasn’t negative in the last two quarters of 2022.
A recession is generally defined as two consecutive quarters of negative real GDP growth, indicating a sustained period of economic contraction. According to the article, Canada’s economy shrank in December, but this alone does not indicate a full recession unless the negative growth extends over two consecutive quarters. The key point here is that although Canada’s economy did not grow in the last quarter, it is not explicitly stated that real GDP was negative for two quarters in a row. If the economy had contracted over two consecutive quarters, then a recession would have been declared.
In December, the contraction in real GDP may be a short-term fluctuation, but without additional data showing sustained negative growth over two quarters, it is not enough to classify the economy as being in a recession at the end of 2022. The drop in GDP in December could be due to temporary factors, such as seasonal variations, but it does not meet the technical definition of a recession based on the standard two-quarter rule.
Thus, while real GDP did not grow in the last quarter, the economy can only be considered in a recession if the growth had been negative for two consecutive quarters, which is not indicated in the information provided by the article. Therefore, the economy was not in a recession at the end of 2022 based on the available data.