If we are operating inside our production possibilities frontier,

A) it is possible the economy is in a recession.
B) it is possible the economy is in a depression.
C) it is possible that the economy is in neither a recession or a depression.
D) All of the choices are correct.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between different choices in the allocation of resources.

Recession

A significant decline in economic activity across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Depression

A prolonged and severe downturn in economic activity, characterized by high unemployment, falling prices, and reduced levels of trade and investment.