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A country's gross domestic product (GDP) increases during ___ (a) ___ and decreases during ___ (b) ___.
1. (a) buoyancy (b) recession
2. (a) deflation (b) reflation
3. (a) strong (b) weak
4. (A) recession (b) buoyancy

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Correct Answer - Option 1 : (a) buoyancy (b) recession

The correct answer is (a) buoyancy (b) recession.

  • A country's gross domestic product (GDP) increases during buoyancy and decreases during the recession.

  •  Gross Domestic Product (GDP):
    • It is the total money value of all final goods and services produced within the geographical boundaries of the country during a given period of time.
    • GDP = C + G + I
      • C = Consumption expenditure
      • G = Government expenditure
      • I = Investment expenditure
    • GDP at Market Price (GDP)
      • It refers to the total value of all the goods and services at market price produced during a year within the geographical boundaries of the country.
    • GDP at Factor Cost (GDPfc)
      • GDP can be calculated at factor cost.
      • This measure more accurately reveals the income paid to factors of production.
    • GDP increases when the total production is done in-country increases and the consumers demand the production.
      • Hence, the demand and supply increases and consumers bring out more liquidity( money) into the market.
    • It decreases during the time of recession because the demand decreases ad the money and supply in the market reduce resulting in reduction in GDP.

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