Final answer:
An economy that experiences a significant contraction for two consecutive quarters is in a C)recession. A recession is when the economy declines from its peak to the trough, and is part of the larger business cycle which also includes periods of expansion.
Step-by-step explanation:
An economy that experiences significant contraction that lasts for at least two economic quarters in a row is in a recession. According to the National Bureau of Economic Research (NBER), a recession is part of the business cycle that begins after the economy reaches a peak of activity and ends as the economy reaches its trough. The recent recession caused by the COVID-19 pandemic, which began in February 2020 and officially ended in May 2020, exemplifies the rapid and severe nature of some economic downturns, contrasting with the longer-term Great Recession that spanned from December 2007 to June 2009.
The business cycle is characterized by the movement of the economy from a peak to a trough and then from trough to peak, with expansions occurring in the intervening periods. Significant periods of expansions have been recorded since the 1960s, according to historical economic data. Notably, the expansion following the Great Recession was the longest on record until it ended with the pandemic-induced recession.