Data for the U.S.economy in the years 2007-2009 show that real GDP and inflation moved in the direction predicted by the economic fluctuations model.

Question

Quizplus · Accepted Answer

The economic fluctuations model predicts that real GDP and inflation will move in opposite directions, with inflation increasing during expansionary periods and decreasing during contractionary periods. The data for the U.S. economy from 2007-2009 show that real GDP decreased during this period, indicating a contractionary period, and inflation also decreased, supporting the predictions of the model. Therefore, the answer is true.