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The Figure Below Plots Real and Potential GDP Between 1971

question 139

Essay

The figure below plots real and potential GDP between 1971 and 1977. Given the data in the corresponding table, can changes in the rate of inflation over this period be explained by the percent deviation between real and potential GDP? Do these data support or refute the validity of the assumptions about the IA line? $The figure below plots real and potential GDP between 1971 and 1977. Given the data in the corresponding table, can changes in the rate of inflation over this period be explained by the percent deviation between real and potential GDP? Do these data support or refute the validity of the assumptions about the IA line? \begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { GDP Price } \\ \text { Deflator } \end{array} \\ \hline 1971 & 37.10 \\ 1972 & 38.80 \\ 1973 & 41.30 \\ 1974 & 44.90 \\ 1975 & 49.20 \\ 1976 & 52.30 \\ 1977 & 55.90 \\ \hline \end{array}$ $\begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { GDP Price } \\\text { Deflator }\end{array} \\\hline 1971 & 37.10 \\1972 & 38.80 \\1973 & 41.30 \\1974 & 44.90 \\1975 & 49.20 \\1976 & 52.30 \\1977 & 55.90 \\\hline\end{array}$

Definitions:

Formation

The process of being naturally formed or the structure or composition of something that has been formed, often used in geological contexts.

Migration

The movement of people, animals, or particles from one location to another, often driven by environmental factors, social changes, or economic pressures.

Meanders

Naturally occurring bends or curves in a river or waterway, typically resulting from erosion and sediment deposition.

Erode

The process by which natural forces such as water, wind, or ice wear away soil, rock, or other materials from the Earth's surface.