By Olivier Blanchard
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If the inflation rate declines but remains positive, prices are rising but at a slower rate. Note: The inflation rate is measured here using the GDP deflator. S. Department of Commerce and Economic History Services. is not steady. There are repeated periods during which real GDP falls, the most dramatic instance being the early 1930s. Such periods are called recessions if they are mild and depressions if they are more severe. Not surprisingly, periods of declining income are associated with substantial economic hardship.
Two aspects of this figure are noteworthy. First, real GDP grows over time. Real GDP per person today is about eight times higher than it was in 1900. This growth in average income allows us to enjoy a much higher standard of living than our greatgrandparents did. S. Economy Real GDP measures the total income of everyone in the economy, and real GDP per person measures the income of the average person in the economy. This figure shows that real GDP per person tends to grow over time and that this normal growth is sometimes interrupted by periods of declining income, called recessions or depressions.
Students can get an eBook annotated just for them, customized for the course. WebCT The Mankiw WebCT e-pack enables instructors to create a thorough online course or a course Web site. The e-pack contains online materials that facilitate critical thinking and learning, including preprogrammed quizzes and tests that are fully functional in the WebCT environment. indd xxxv 04/19/12 6:47 PM xxxvi | Supplements and Media BlackBoard The Mankiw BlackBoard course cartridge makes it possible to combine BlackBoard’s popular tools and easy-to-use interface with the text’s Web content, including preprogrammed quizzes and tests.