The Table Below Shows the Percentage Difference Between Real and Potential

question 41

Essay

The table below shows the percentage difference between real and potential GDP and the rate of inflation for the years 1999 through 2003. If there were a presidential election in the year 2000, would these data support the view that there was a political business cycle during this period? $$\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Percentage Difference } \\\text { Between Real and } \\\text { Potential GDP }\end{array} & \begin{array} { c } \text { Rate of } \\\text { Inflation }\end{array} \\\hline 1999 & - 1.00 & 5.47 \\\hline 2000 & 1.01 & 4.54 \\\hline 2001 & 3.23 & 6.05 \\\hline 2002 & - 0.27 & 8.42 \\\hline 2003 & - 3.76 & 9.20 \\\hline\end{array}$$

---

Definitions:

English Major

An academic field of study that focuses on literature, language, and writing in the English language.

Expected Utility

Sum of the utilities associated with all possible outcomes, weighted by the probability that each outcome will occur.

Income

The money a person or business receives in exchange for providing a good or service or through investing capital.

Research

The systematic investigation into and study of materials and sources to establish facts and reach new conclusions.