For my macroeconomics class, I must use the following graph to make an interpret

Question

For my macroeconomics class, I must use the following graph to make an interpretation regarding the economic cycle. Can you help me. Identifies the difference between real and nominal GDP and for this uses the given graph, which is based on the current PR economy, incorporates the importance of calculating the growth rate of the two concepts mentioned above, how it is calculated and the interpretation regarding the economic cycle (recession, decline, recovery, boom point) (see graph)

Statistical appendix of the economic report of P.R

(YERAS) 2015 2016 2017

Gross national product (%) $ 69,570.20 (2015); $ 70,134.50 (2016); $ 70,565.40(2017)

Growth in the gross product (%)

at current prices 1.1(2015); 0.8(2016); 0.5(2017)

at constant prices -0.7 -1.1 -2.4

Total Employment (in thousands of people) 984(2015); 1,002(2016); 989)2016)

Inflation rate -0.3(2015); -0.2(2016); 0.6(2017)

Population (in thousands of people) 3,504(2015); 3,442(2016); 3,372(2017)

Explanation / Answer

The main difference between nominal and real gdp is that real values are adjusted for inflation while nominal values are not. Values for real gdp are adjusted for differences in prices while figures for nominal gdp are not. The gdp deflator is calculated by dividing nominal gdp by real gdp . There are four economic cycles - recession, decline, recovery and boom. In recession there is increased unemployment that leads to less growth and recession occurs due to negative gdp. Then in the decline phase there is inflation, capital investment reduction and trade balance changes. At the recovery stage the economy troughs out and starts working its way up to better financial footing. In the boom stage the economy is producing at maximum allowable output, employment is at or above full employment and inflationary on prices are evident.

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