Question

The information below describes the real GDP per capita for a country for the period from 1985 through to 2001.

Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Real GDP per Capita 6,000 6,300 6,700 7,200 7,850 8,250 8,450 8,550 8,575 8,510 8,370 8,100 7,950 7,925 7,960 8,035 8,155

1. If a new business cycle began in 1985, how long was this cycle?

2. In which year did the peak occur? The trough occurred in which year?

3. How long was the expansion? How long was the recession?

Answer 1

You can see there's expansion till 1993 and then recession till 1998 because the GDP per capita has been continuously increasing and then decreasing therefore there peak duration is 1998-1985 = 13 years

The maximum value is $8575 and it occurs at a period of 1993. The trough implies there's a minimum point and this is in the year 1998.

The expansion was from 1985 to 1993 which is 1993-1985 = 8 years.

The recession is from 1993 to 1998 which is 1998-1993 = 5 years.