1. Key facts about economic fluctuations Aa Aa The following graph approximates
ID: 1116344 • Letter: 1
Question
1. Key facts about economic fluctuations Aa Aa The following graph approximates business cycles in the United States from January 1973 to January 1983. The vertical blue bars coincide with periods of six or more months of declining Real Gross Domestic Product (real GDP) REAL GDP Billions of dollarsl 5500 5200 4900 4600 4300 4000 1973 1975 1977 19791981 1983 YEAR Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in real GDP are often referred to as True or False: The small ups and downs in real GDP appear to follow a consistent, predictable pattern during this period O False True Which of the following probably occurred as the U.S. economy experienced declining real GDP in 1980? Check all that apply Retail sales increased Industrial production declined Home sales increased Consumer spending declined In which of the following years is it likely that the unemployment rate rose? Check all that apply 1976 1981 1978Explanation / Answer
(1) Short run fluctuations in real GDP are referred to as the Business Cycle.
(2) TRUE
(the trend line showing ups and downs is approximately linearly upward rising)
(3) Probable events:
- Industrial production declined
- Consumer spending declined
(During low real GDP growth, firms lower production and households lower consumption)
(4) 1981
Unemployment rate wiill rise when real GDP falls, which took place in 1981 (among given choices).
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