Principles of Economics- Mankiw (5th) 488

Principles of Economics- Mankiw (5th) 488 - 504 PA R T E I...

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504 PART EIGHT THE DATA OF MACROECONOMICS The most obvious feature of these data is that real GDP grows over time. The real GDP of the U.S. economy in 1999 was more than twice its 1970 level. Put differently, the output of goods and services produced in the United States has grown on average about 3 percent per year since 1970. This continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. A second feature of the GDP data is that growth is not steady. The upward climb of real GDP is occasionally interrupted by periods during which GDP declines, called recessions. Figure 22-2 marks recessions with shaded vertical bars. (There is no ironclad rule for when the official business cycle dating com- mittee will declare that a recession has occurred, but a good rule of thumb is two consecutive quarters of falling real GDP.) Recessions are associated not only with lower incomes but also with other forms of economic distress: rising
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