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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 often have recessions occurred since the end of World War II (1945)?

What are the main components of measuring GDP

with what is demanded?

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.

What are the main components of measuring GDP

with what is produced?

Why do you suppose that U.S. GDP is so much

higher today than 50 or 100 years ago?
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