Question

The decline in Real GDP that occurs after the economy has peaked _____.

(A) Recurrent swings (up and down) in Real GDP
(B) The low point in Real GDP just before it begins to turn up
(C) The portion of personal income that can be used for consumption or saving
(D) GDP minus the capital consumption allowance

Answer 1

(D) GDP minus the capital consumption allowance

Step-by-step explanation:

Capital consumption allowance is the expected percentage in value that is expected to depreciate and yes after the highest point in the business cycle, the next phase is Recession phase that is a declining phase where there is not much spending.

Answer 2

(D) GDP minus the capital consumption allowance

Step-by-step explanation:

An econmy that reached it peak is the highest point between the end of an economic expansion and start of a contraction in a business cycle. In other words, peak is the turning point in the business cycle at which outputs stop increasing and starts decreasing, and afterr peak, recession phrase is often accompanied in which outputs is decreasing and unemployment is increasing.

Capital consumption allowance is the amount of money q country spend In a year to maintain its present level of econmic production. Capital consumption allowance represents depreciation in the overall econmy and expressed percentage of GDP.

So after the highest point in a business cycle; the peak, inflation and outputs decreases and leads to recession where won't be enough capital flow within the economy, spending and purchasing power would reduce.