During the business cycle,
A)real GDP fluctuates around nominal GDP.
B)nominal GDP fluctuates around real GDP.
C)real GDP fluctuates around its trend.
D)trend GDP fluctuates around real GDP.
E)real GDP falls after the trough.

Question

Quizplus · Accepted Answer

Real GDP fluctuates around its trend during the business cycle. The trend represents the long-term growth rate of the economy, while fluctuations around the trend indicate periods of recession, expansion, and contraction. Nominal GDP, on the other hand, includes the effects of inflation and price changes, making it a less reliable indicator of economic performance over time.

During the Business Cycle