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?