A. If the structural unemployment rate is 2% and the frictional unemployment rate is 3% in a certain year and the actual unemployment rate is 7.8%, nominal GDP is $12 trillion. What is the size of the GDP gap in percentage terms? And what kind of gap is this economy experiencing?
Calculate Lost GDP and Potential GDP.
B. Suppose an economy's nominal GDP was $12 trillion in 2010 and $9.5 trillion in 2011. Assume the GDP price index was 175 in 2010 and 177 in 2011.
What is the economic growth rate of this economy's real GDP? What is the growth rate in nominal GDP?
What is the inflation rate in this economy?
C. If the price level increases by 15% while nominal income increases by 8%, then real income would fall by about what percent?
A. If the structural unemployment rate is 2% and the frictional unemployment rate is 3% in a certain year and the actual unemployment rate is 7.8%, nominal GDP is $12 trillion. What is the size of the GDP gap in percentage terms? And what kind of gap is this economy experiencing?
Calculate Lost GDP and Potential GDP.
B. Suppose an economy's nominal GDP was $12 trillion in 2010 and $9.5 trillion in 2011. Assume the GDP price index was 175 in 2010 and 177 in 2011.
What is the economic growth rate of this economy's real GDP? What is the growth rate in nominal GDP?
What is the inflation rate in this economy?
C. If the price level increases by 15% while nominal income increases by 8%, then real income would fall by about what percent?
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Related questions
Real versus nominal GDP
Consider a simple economy that produces two goods: apples and oranges. The following table shows the prices and quantities for the goods over a three-year period.
| Year |
Apples
|
Oranges
|
||
|---|---|---|---|---|
| Price | Quantity | Price | Quantity | |
| (Dollars per apple) | (Number of apples) | (Dollars per orange) | (Number of oranges) | |
| 2010 | 1 | 120 | 1 | 195 |
| 2011 | 2 | 130 | 4 | 195 |
| 2012 | 4 | 130 | 4 | 145 |
A. Use the information from the previous table to fill in the following table.
| Year | Nominal GDP | Real GDP | GDP Deflator |
|---|---|---|---|
| (Dollars) | (Base year 2010, Dollars) | ||
| 2010 | |||
| 2011 | |||
| 2012 |
B. From 2011 to 2012, change in nominal GDP is __________, and real GDP is ________.
C. The inflation rate in 2012 was ____________.
D. Why is real GDP a more accurate measure of an economy's production than nominal GDP?
a. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.
b. Real GDP includes the value of exports, but nominal GDP does not.
c. Real GDP is not influenced by price changes, but nominal GDP is.
