Question

1. Key facts about economic fluctuations The following graph approximates business cycles in the United States from the first quarter of 1955 to the third quarter of 1959. The vertical blue bar coincides with periods of 6 or more months of declining real gross domestic product (real GDP). 2800 2700 REAL GDP (Billions of dollars) 2600 2500 2400 1955 1956 1958 1957 YEAR 1959 Source: "Current-dollar and Real GDP," Bureau of Economics Analysis, last modified May 1, 13, accessed May 15, 13, http://www.bea.gov/national/xls/gdplev.xls. Notice that real GDP trends upward over time but experiences ups and downs in the short run. A period of declining real GDP, such as the blue-shaded period in 1957, is known as True or False: Small ups and downs in real GDP follow a consistent, predictable pattern.

Answer 1

1 - Option B

Recession

The period of declining real GDP is called recession. Expansion is the rise in real GDP. Business cycle is the fluctuations in real GDP.

2 - False

The patterns in business cycle are complex and are unpredictable. They do not follow the fixed trend

3 - Option A , Option C

Unemployment rate increased , consumer spending decline

Both these factors led to the decline of the real GDP and recession which started from 1958.