SIE (Securities Industry Essentials) Practice Exam

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A decline in the GDP lasting for at least how many quarters is considered a recession?

1 quarter
2 quarters
3 quarters
4 quarters

The correct answer is: 2 quarters

A decline in the GDP usually refers to a decrease in the total value of goods and services produced in a country. A recession is an economic downturn typically characterized by a decline in economic activity. Therefore, in order to officially be considered a recession, the GDP must decline for a sustained period of time. All of the other options, 1, 3, and 4 quarters, are not sufficient time periods to determine if the decline in GDP is significant enough to be considered a recession. B 2 quarters is the minimum amount of time, lasting 6 months, that is widely recognized as a significant decline in economic activity.