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Chapter 19: Q. 24 (page 471)

Why do you think that GDP does not grow at a steady rate, but rather speeds up and slows down?

Short Answer

Expert verified

Business cycle fluctuations.

Step by step solution

01

Step1. Introduction

GDP never shows a steady growth rate. It either increases heavily, or slows down considerably. It never grows at a steady rate but with fluctuations.

02

Step2. Explanation

The GDP shows fluctuations in its growth due to the general fluctuations in the business cycle of an economy. When a business cycle enter a boom period, GDP increases tremendously. But, when it enters a recessionary period, it will undergo a decline.

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