Business Cycle Facts: How GDP moves over time

HideShow resource information
Why do GDP graphs use 'per capita' and what does that mean?
Per capita means per person: the total GDP for a period is divided by the population for that period. This is done in order to eliminate false assumptions - GDP might increase due to an increase in population; not a reflection on welfare
1 of 5
What is price-invariance? How is it achieved? Cons?
Price- invariant GDP data is achieved through using relative prices rather than those of the time. A 1900 - 2000 graph will use the prices of year 2000 to examine the changes in GDP over time. Con: the reliance of the interpreted price
2 of 5
What are filters and what do they show? Discuss the two main types
Filters are lines of best fit, they show the trend of data. A straight line is easy to apply, but it assumes that the long-run growth rate is the same (not entirely correct). The HP filter is better as it is more closely linked to the data
3 of 5
Discuss the axioms of a % deviation graph
The flat line represents the average growth rate (2.1% US). The peaks and troughs show the percentage deviations from trend in GDP. They are often exceptionally volatile which characterizes GDP
4 of 5
Discuss Business Cycle Variations in GDP
There are no real patterns and consistencies. The only regularity is short term persistence, when the GDP moves to +ve or -ve, it tends to stay there for an average of 8 periods
5 of 5

Other cards in this set

Card 2

Front

What is price-invariance? How is it achieved? Cons?

Back

Price- invariant GDP data is achieved through using relative prices rather than those of the time. A 1900 - 2000 graph will use the prices of year 2000 to examine the changes in GDP over time. Con: the reliance of the interpreted price

Card 3

Front

What are filters and what do they show? Discuss the two main types

Back

Preview of the front of card 3

Card 4

Front

Discuss the axioms of a % deviation graph

Back

Preview of the front of card 4

Card 5

Front

Discuss Business Cycle Variations in GDP

Back

Preview of the front of card 5

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »