What characterizes a recession?

A recession is characterized by a period of temporary economic decline, typically identified by a decrease in national output and prolonged reduction in economic activity. During a recession, key indicators such as GDP (Gross Domestic Product), income, employment, manufacturing, and retail sales generally witness a downturn. This phase is usually marked by reduced consumer confidence, leading to lower spending and investment by businesses and individuals.

The other options do not align with the fundamental characteristics of a recession. An increase in trade and industrial activity signifies economic growth, while stable economic growth and a marked increase in GDP also indicate a healthy economy rather than decline. Therefore, identifying a recession means recognizing patterns of economic downturn, making the identification of choice B as the defining characteristic correct.