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What causes real GDP to fluctuate in the short run? Sometimes, real GDP grows slow, fast...

What causes real GDP to fluctuate in the short run? Sometimes, real GDP grows slow, fast not at all, why is that? What are these fluctuations called?

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Answer #1

Fluctuations in real GDP can be because of a number of reasons:

1- Weak demand- In some cases due to some macroeconomic shock like a disaster, the aggregate demand might be low and hence production is low. This will reduce real GDP

2-Supply shock- This can be due to adverse supply shocks, like rising oil prices, like it happened in 1973, or a crash in the financial markets. This will immediately reduce production.

These fluctuations are called real business cycles(RBC)

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