Gross domestic product (gdp): trends & cycles

gross domestic product: trends & cycles

Level - ADVANCE

Economies grow in cycles of boom and bust around the trend GDP. The trend GDP itself changes with time and the level of development of the country. Watch this video to learn more about trends and cycles in GDP and how it impacts the returns that can be earned on investment in that country.

AUTHOR(S): Uma Shashikant, Deepa Vasudevan

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Gross Domestic Product: Trends & Cycles

 Economies grow in cycles of boom and bust around the trend GDP. The trend GDP itself changes with time and the level of development of the country. Watch this video to learn more about trends and cycles in GDP and how it impacts the returns that can be earned on investment in that country.

1 2 3 4

    1.During the last stages of a boom cycle, a likely monetary policy action would be to



  • Reduce interest rates to keep stimulate consumption
  • Reduce interest rates to stimulate equity markets
  • Increase interest rates to prevent overheating
  • 2.On the aggregate demand side, the largest contribution to India's GDP is from



  • Investment by corporates
  • Private consumption spending
  • Government spending
  • 3.Trend growth in nominal GDP is a good indicator of



  • Inflation
  • Return on capital employed in the country
  • Risk of investment in the country
  • 4.The trend rate of GDP around which the Indian economy grows in cycles of boom and bust is



  • Tends to be downward sloping
  • Fixed at 5%
  • Tends to be upward sloping
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