Which of the Following Statements Is True

Multiple Choice

Which of the following statements is true?

A) A recession occurs when the expenditure line shifts down the 45-degree line.
B) A recession occurs whenever potential GDP is less than real GDP at the point of spending balance.
C) A recession occurs whenever income and expenditures are not equal.
D) A recession occurs when the expenditure line crosses the 45-degree line at a level of income less than potential GDP.
E) The expenditure line cannot be used to identify recessions or expansions.