Question

2. Economic fluctuations and growth The following table shows data on a hypothetical country's real GDP from 1970 through 1978: Year Real GDP (Billions of Dollars) 1970 475 1971 480 1972 505 1973 500 1974 485 1975 490 1976 500 1977 505 1978 525 The green line on the following graph shows the economy's long-term growth trend. Use the blue points (circle symbol) to plot the real GDP in each of the years listed. (Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.) Next, place the black point (plus symbol) on the graph to indicate the point on the real GDP curve that definitely represents a peak. Finally, place the grey point (star symbol) on the graph to indicate the point on the real GDP curve that definitely represents a trough. Real GDPPeakTrough197019711972197319741975197619771978550540530520510500490480470460450REAL GDP (Billions of dollars)YEARLong-term growth trend Calculate the percentage change in real GDP in each of the years shown. (Hint: The percentage change in real GDP equals the change in GDP from the previous year to the current year. For example, you can calculate the percentage change for 1971 by finding the change in GDP from 1970 to 1971, dividing this change by the level of GDP in 1970, and then multiplying the result by 100.) Once you've calculated the percentage change for each of the years, use the orange points (square symbol) to plot your results on the following graph, rounded to the nearest percent. For each year, plot the percentage change from the year before. (Hint: For example, you should plot the growth rate from 1970 to 1971 with a horizontal coordinate of 1971.) GRAPH This economy experienced a contraction in the years   . On the first graph (showing real GDP), this contraction is seen as a period in which the level of real GDP   . On the second graph (showing annual change in real GDP), this contraction is seen as a period in which the growth rate of real GDP   . True or False: This economy was experiencing a contraction in 1971. True False

Answer 1

In RGDP the Contraction is observed in 1974 in the graph

In RGDP growth the Contraction is observed in 1974 in the graph.

Answer: False

There is no Contraction observed in 1971 there is only growth.