It is a wellknown
fact that modern economies are characterized
by business cycles. Does this mean that it is very easy for
firms to decide whether to expand or not, since entrepreneurs
can easily forecast future economic growth? Briefly
explain the reasons for your answer.
Q73: Go to the
Web site of the Federal Reserve Bank of St. Louis (FRED)
(research.stlouisfed.org/fred2/).
a. Find the values for the most recent quarter for the
following three variables: (1) Nominal Gross Domestic
Product (GDP), (2) Real Gross Domestic Product
(GDPC1), and (3) Real Potential Gross Domestic Product
(GDPPOT).
b. Using the data from part (a), calculate the GDP Price
Deflator for the most recent quarter.
c. Calculate for this quarter the percentage difference between
real GDP and potential GDP.
d. Using Figure 21.2 on page 762, describe the relationship
between real GDP and potential GDP over the
past 10 years.