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Chapter 6: Q. 24 (page 161)

Why do you think that GDP does not grow at a

steady rate, but rather speeds up and slows down?

Short Answer

Expert verified

GDP does not grow at the same rate every year. Because of the business cycle's oscillations, this is the case.

Step by step solution

01

Business cycle

A business cycle is the periodic development and contraction of a country's economy, as measured largely by GDP. Governments seek to affect business cycles by modifying interest rates, increasing or decreasing spending, and raising or lowering taxes.

02

Explanation

GDP does not rise at the same pace every year. Because of the business cycle's oscillations. GDP increases quicker during a boom because the economy's output is high and consumers are prepared to spend more. During booms, unemployment is at a minimum. Furthermore, during a boom, demand for products and services is high, resulting in salary increases.

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Most popular questions from this chapter

According to Table 6.7, how long has the average recession lasted since the end of World War II?

Which of the following are included in GDP, and which are not?

a. The cost of hospital stays

b. The rise in life expectancy over time

c. Child care provided by a licensed day care center

d. Child care provided by a grandmother

e. A used car sale

f. A new car sale

g. The greater variety of cheese available in supermarkets

h. The iron that goes into the steel that goes into a refrigerator bought by a consumer.

According to Table 6.7, how long has the average expansion lasted since the end of World War II?

How do you convert a series of nominal economic

data over time to real terms?

Ethiopia has a GDP of \(8 billion (measured in U.S.

dollars) and a population of 55 million. Costa Rica has a GDP of \)9 billion (measured in U.S. dollars) and a population of 4 million. Calculate the per capita GDP for each country and identify which one is higher.
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