How did business cycles change after World War II?
How did business cycles change after World War II ? Recessions became shorter and periods of expansion became longer. What does a trough indicate? The GDP has stopped declining and has begun to increase.
What does a trough indicate *?
A trough is an elongated (extended) region of relatively low atmospheric pressure, often associated with fronts. Troughs may be at the surface, or aloft, or both under various conditions. Most troughs bring clouds, showers, and a wind shift, particularly following the passage of the trough .
What is the first step in constructing a price index?
A price index is a weighted average of the prices of a selected basket of goods and services relative to their prices in some base-year. To construct a price index we start by selecting a base year. Then we take a representative sample of goods and services and calculate their value in the base year and current prices .
Which of the following is the index used to measure changes in gross domestic product?
GDP is a measure of a nation’s economic output and income. It is the total market value, measured in dollars, of all goods and services produced within a country’s borders in one year. The Consumer Price Index (CPI) is the most commonly used measure of price-level changes in the economy.
Which of these are the two most significant causes of income inequality?
The rate of growth has declined slowly. Which of these are the two most significant causes of income inequality ? Differences in wealth and differences in education.
What conditions stop the economy from growing and turn an expansion into a contraction?
What conditions stop the economy from growing and turn an expansion into a contraction ? External shocks. What does a trough indicate? The GDP has stopped declining and has begun to increase.
What happens after a trough?
A trough is the stage of the economy’s business cycle that marks the end of a period of declining business activity and the transition to expansion. The business cycle is the upward and downward movement of gross domestic product and consists of recessions and expansions that end in peaks and troughs .
What happens to prices when the economy is in a trough?
While an economy’s GDP is lower during a business cycle’s contraction phase than it is during the expansion and peak periods, it will typically drop to its lowest point during the trough .
When national output rises the economy is said to be in?
Therefore, when real national output rises, the economy is producing a larger amount of goods and services, which is known as economic growth. In the above example, the nominal GDP in 2015 was $60 and the nominal GDP in 2010 was $30.
Do the index numbers change when the base year is changed from Year 1 to Year 2?
The first percentage change in prices has been done for you. Do the index numbers change when the base year is changed from Year 1 to Year 2 ? YES!
What are the three stages of constructing the CPI?
The CPI is defined to equal 100 for the reference base period. Constructing the CPI involves three stages : selecting the CPI basket; conducting the monthly price survey; calculating the CPI .
Why is hyperinflation bad for the economy?
Hyperinflation erodes the value of currency and can render it worthless. The effect on a nation’s economy is substantial. It saps tax revenues, shutters businesses, raises the unemployment rate, and drives the cost of living so high that political instability ensues.
Is GDP Deflator the same as CPI?
Although at first glance it may seem that CPI and GDP Deflator measure the same thing, there are a few key differences. The second difference is that the GDP Deflator is a measure of the prices of all goods and services while the CPI is a measure of only goods bought by consumers.
What does it mean when GDP deflator decreases?
Notice that in 2013 and 2014, the GDP price deflator decreases . This means that the increase in the aggregate level of prices is smaller in 2013 and in 2014 compared to the base year 2010.
How is real GDP calculated?
In general, calculating real GDP is done by dividing nominal GDP by the GDP deflator (R). For example, if an economy’s prices have increased by 1% since the base year, the deflating number is 1.01. If nominal GDP was $1 million, then real GDP is calculated as $1,000,000 / 1.01, or $990,099.