Consider the info given in the following table to answer the following question.
ID: 2506157 • Letter: C
Question
Consider the info given in the following table to answer the following question. Assume the business cycle is entirely determined by changes in real GDP:
a. Identify the peak and trough during this period.
b. Comment on the times of the inflation rate and the stock prices index.
Explanation / Answer
The business cycle is determined by the changes in the real GDP. Based on this assumption, we can answer the question as follows:
a) The Peak of the business cycle is in the month of June as the value of the real GDP is the maximum at that time. The value of the real GDP in June is $11200 billions which is the highest from January to June.
The trough will be in the month of April. This is because the value of the real GDP is least in the month of April i.e. 9250 billions.
b) The times on inflation rate is calculated as the percentage change in the value of the commodity calculated in year-on-year basis. This value has been increasing at a constant rate till April and then it has decreased in the months of may and June.
The value of the stock price index has been decreasing till March and then it has increased till June.