A country’s annual growth rates over a 10-year period are shown in the following

Question

A country’s annual growth rates over a 10-year period are shown in the following table.

What was the country’s trend rate of growth over this period?

Instruction: Round your answer to one decimal place.

The trend rate of growth = ____ percent

Which set of years most clearly demonstrates an expansionary phase of the business cycle?

Years____ through ____

Which set of years best illustrates a recessionary phase of the business cycle?

Years ____ through _____

Explanation / Answer

1) The trend rate of growth equals the average for the 10 year period.

It is equal to (5+3+4-3-4+3+4+5+6+2)/10 = 2.5%

2)The set of years which clearly demonstrates an expansionary phase of the business cycle is-

Years 6 through 9

Because the rate of growth is positive and increasing over the time period.

3) The set of years which best illustrates the recessionary phase of the business cycle is-

Years 4 through 5

Because the rate of growth is negative for the time period.

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