Question

Economic fluctuations and growth The following table shows data on a hypothetical country's real GDP from 1980 through 1988 : The green line on the following graph shows the economy's long-term growth trend. the blue points (circle symbol) to plot the real GDP in each of the years listed. (Note: Plot your points in the order in which you would like them hected. Line segments will connect the points automatically.) Next, place the black point (plus symbol) on the graph to indicate the point on the GDP curve that definitely represents a peak. Finally, place the grey point (star symbol) on the graph to indicate the point on the real GDP curve definitely represents a trough. Calculate the percentage change in real GDP in each of the years shown. (Hint: The percentage change in real GDP equals the change in GDP from the previous year to the current year. For example, you can calculate the percentage change for 1981 by finding the change in GDP from 1980 to 1981, dividing this change by the level of GDP in 1980, and then multiplying the result by 100%. ) Once you've calculated the percentage change for each of the years, use the orange points (square symbol) to plot your results on the following graph, rounded to the nearest percent. For each year, plot the percentage change from the year before. (Hint: For example, you should plot the growth rate from 1980 to 1981 with a horizontal coordinate of 1981.) This economy experienced a contraction in the years which the level of real GDP seen as a period in which the growth rate of real GDP - On the first graph (showing real GDP), this contraction is seen as a period in On the second graph (showing annual change in real GDP), this contraction is True or false: This economy was experiencing a contraction in 1988. True False

Answer 1

Calculating the percentage change in real GDP requires knowing the GDP values for each year to determine growth or contraction. The economy experienced growth from 1980 to 1990 with a mix of inflation and actual GDP growth. To determine if there was contraction in 1988, the GDP of that year compared to prior year's GDP would be required.

Step-by-step explanation:

To calculate the percentage change in real GDP for the hypothetical country from 1980 to 1988, you would subtract the previous year's GDP from the current year's GDP, divide that number by the previous year's GDP, and then multiply the result by 100 to get a percentage. After calculating the percentage change for each year, you can plot these on a graph to visualize the changes over time.

The provided data indicates that from 1980 to 1990, real GDP grew by 39% while prices increased by 51%. This means that approximately 57% of the growth was due to inflation and the remaining 43% was actual growth in real GDP. Recessions occurred during the years with noticeable declines in the real GDP such as 1973-1975 and 1981-1982, as well as periods of flattening in 1990-1991 and 2001.

In light of this information, if the level of real GDP in 1988 was less than that in 1987, then this would be indicative of a contraction. If it instead shows an increase, or if there is not enough information provided to determine a definitive trend for the year 1988, then the statement that 'This economy was experiencing a contraction in 1988' would be false.