|Question||The United States experienced a major economic downturn in the early 1980s. Consider the data on real GDP and the price level in Table 19-2.
a. For the years 1981 to 1985, calculate the rate of growth of real GDP and the rate of inflation. Can you determine in which year there was a steep business downturn or recession?
b. In an AS-AD diagram like Figure 19-6 (page 379), draw a set of AS and AD curves that trace out the price and output equilibria shown in the table. How would you explain the recession that you have identified?