Quiz 10 3 The following table gives the potential GDP and real GDP for a very sm

Question

Quiz 10 3 The following table gives the potential GDP and real GDP for a very small economy, both measured in 2005 dollars. Year 2001 20021 ear 2005 Dollars) (2005 Dollars) output Gap 100 105 100 1100 2004 | 113115 a) Fill in the column for the output gap. Instructions: To answer this question, complete the output gap column in the above table, Ir you are entering any negative numbers be sure to Inciude a negative sign t) in front of those numbers, Leave no celis blank enter "0" wherever required b) Would you expect the unemployment rate to be higher in 2002 or 2004? In 2004 because the output gap is positive. O In 2002 because the output gap is positive. O In 2004 because the output gap is negative. 0 In 2002 because the output gap is negative. c) In which year would you expect it to be casiest to find a job? (Assume the NAIRU is the same each year) 2

Explanation / Answer

a) Output Gap: it is difference between the actual real output and real potential GDP or output.

2001 : 0

2002: 2,

2003: 0

2004: -2       

b)   2004 because output gap is negative.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.