The Indicator from Planet Money reported that GDP fell by 32.9% in the second quarter of...

The Indicator from Planet Money reported that GDP fell by 32.9% in the second quarter of 2020. Wha† value from the GDP calculations are they using to measure the growth rate? Did the economy really shrink by 32.9
% in 3 months? Explain.

Solutions

Expert Solution

The annualized GDP growth rate is a measure of the increase or decrease of the GDP from one year to the next. Understanding this measurement is a way of knowing whether the general economy is getting better, worse or staying stable over time. The gross domestic product from April to June did plunge 32.9% but it did so on an annualized basis which means that it fell 32.9 percent as compared to the same quarter last year.From an actual contractionary perspective, the Q2 decline in GDP was somehwhere close to 1.8%.

Rahul Sunny answered 2 years ago

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