Question

1) Suppose that the annual rates of growth of real GDP of Schnurland over a five-year period were sequentially as follows: 4 percent, -3 percent, 2 percent, 3 percent, and 6 percent. A) What was the average of these growth rates in Schnurland over these 5 years (to one decimal place)? B) What term would economists use to describe what happened in year 2? B) What term would economists use to describe what happened in year 2?

Answer 1

The annual rates of growth of real GDP of Schnurland over a five-year period were sequentially as follows: 4 percent, -3 percent, 2 percent, 3 percent, and 6 percent.

a. The average of these growth rates in Schnurland over these 5 years is (4+ -3 +2+3+6) = 12/5 = 2.4 percent

b. In second year the growth rate falls from 4 percent to -3 percent , thus growth rate of real GDP falls to negative which means the economy has faced a huge fall in total income , output, employment and every other aspect which economists would like to decribe as recession.