Calculated Risk: Intrade: Odds of a Depression
Quiz: If the annualized real GDP declines 2.5% in each quarter of 2009, how much does real GDP decline in 2009?
A: -10% (as calculated by Intrade adding the four quarters together)
B: -2.5%I’m not making this up. The answer is B. If GDP declines at an annualized rate of 2.5% each quarter, then the total decline in real GDP over four quarters is 2.5%.
So which is correct for Intrade? A a cumulative decline in GDP of more than 10.0% or “adding together the published (annualized) Real GDP figures”? ROFLOL. I think they might have a dispute coming!
Ha! I think I noted this completely ambiguous graph a while back. I love Calculated Risk. Posts like this make me wonder what Tanta would have said. It would have been awesome.
