Answer to Question #308501 in Macroeconomics for Jackey

Question

Changes in GDP are reflected in the business cycle, as well as the rate of inflation and the overall balance of payment situation. True or False

Answer 1

TASK#Q308501

First, to get the exact relationship and elementary impact by the economic and business factors under this subject, it very important to understand the exact meaning of these term and behaviors.

GDP-is the value in monetary terms of all goods and services produced within a certain economy across all markets within such an economy.

Business cycle- on other hand these are fluctuations of expansions(growth) and recessions in business causing inflationary gaps, they have great effect on changes on consumption and supply of goods and services within the economy across all markets.

Inflation rate-is the rate in which consumer goods and services prices are rising and aggregately the currency value falling hence the bargaining power by the consumer reducing.

In general, if we draw these market forces against both the micro and macroeconomic scope, then it suffices to say that whatever the force initiating the deviation from the equilibrium supply and demand of goods and services to whichever the direction, then it projects the expected direction of the GDP.

In short, the GDP multiplier elements-consumption, saving, investment, net export etc. are truly affected by the above stated elements which also affects the overall payment situation, the verily it is True that changes in GDP are reflected in business cycle, as well as rate of inflation and overall balance of payment situation.