Chapter_7_Key_Question_Solutions

# Chapter_7_Key_Question_Solutions - 7-2(Key Question Suppose...

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Unformatted text preview: 7-2(Key Question) Suppose an economy’s real GDP is \$30,000 in year 1 and \$31,200 in year 2. What is the growth rate of its real GDP? Assume that population was 100 in year 1 and 102 in year 2. What is the growth rate of GDP per capita? Growth rate of real GDP = 4 percent (= \$31,200 - \$30,000)/\$30,000). GDP per capita in year 1 = \$300 (= \$30,000/100). GDP per capita in year 2 = \$305.88 (= \$31,200/102). Growth rate of GDP per capita is 1.96 percent = (\$305.88 - \$300)/300).7-4(Key Question) What are the four phases of the business cycle? How long do business cycles last? How do seasonal variations and long-term trends complicate measurement of the business cycle? Why does the business cycle affect output and employment in capital goods and consumer durable goods industries more severely than in industries producing nondurables?The four phases of a typical business cycle, starting at the bottom, are trough, recovery, peak, and recession. As seen in Table 7.2, the length of a complete cycle varies from As seen in Table 7....
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## This note was uploaded on 07/14/2010 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

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Chapter_7_Key_Question_Solutions - 7-2(Key Question Suppose...

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