Real-time data provided by Federal Reserve Economic Data (FRED). Federal Reserve

Question

Real-time data provided by Federal Reserve Economic Data (FRED). Federal Reserve Bank of Saint Louis. The figure shows the U.S. economy in the most recent quarter (the first quarter of 2016). A year earlier, in the first quarter of 2015, real GDP was $16.2 trillion and the GDP deflator was, 109.1. Answer to 1 decimal place. If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. The U.S. output gap in the first quarter of 2016 was percent of potential GDP.

Explanation / Answer

Output gap is the difference between the real output and the potential output.

In 2016, Real output = 16.5 trillions of 2005 $

and, Potential output = 16.9 trillions of 2005 $

Output gap in the first quarter of 2016 = 16.5 - 16.9 = (- 0.4)

LET, The US output gap is x% of potential GDP

i.e. -0.4 = x% * 16.9

x = (-0.4 / 16.9 ) * 100 = -2.4

I.e. The US output gap in the first quarter of 2016 was (-2.4%) of the potential GDP.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

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