If real GDP in 2007 dollars is $1200 billion and the unemployment rate is 8.0 percent when the natural unemployment rate is presumed to be 6.5 percent, then according to Okun's law how much higher could real GDP have been if the economy were operating at its potential output?
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- The rate of output and planned expenditures for the economy of timbuktu are shown in the following table: Total Output(Real GDP in Billion dollars) Planned Aggregate Expenditures (Two-sector Economy) (in billions) 5,000 5,250 5,500 5,500 6,000 5,750 6,500 6,000 7,000 6,250 a. If the economy's full employment rate of output is 6.0 trillion, what will happen to the unemployment rate assuming that it will persist into future? b. What would happen to the equilibrium level of output/income if there will be an autonomous increase in investment of 250 billion?The typical sacrifice ration is considered to be 5% points of GDP lost for every 1% decline in inflation. Also , Okun's laws says that 1% point of unemployment translates into 2% point of GDP .Under the typical sacrifice ratio a reduction in inflation of 6% points would entail a 30% decline in GDP and a 15% increase in the unemployment rate . However, the recent crisis has forced the government to increase inflation by 3% in order to lower unemployment by 2%, then one could calculate the actual sacrifice ration in this case to be. a) a loss of 5% of GDP b) a gain of 4% of GDP c) a loss of 3.17% of GDP d) a gain of 1.33% of GDPWhat is the relationship between potential output and the natural rate of unemployment? a. If the economy currently has a frictional unemployment rate of 2 percent, structural unemployment of 2 percent, seasonal unemployment of 2 percent what is the natural rate of unemployment? Where is the economy operating relative to its potential GDP? b. What happens to the natural rate of unemployment and potential GDP if cyclical unemployment rises to 3 percent with other types of unemployment unchanged from part a? c. What happens to the natural rate of unemployment and potential GDP if structural unemployment falls to 1.5 percent with other types of unemployment unchanged from part a?
- An economy has an unemployment rate of 11% and real GDP grows by 2.5% annually. A treasury official says next year's expected growth rate of 4% is ecpected to bring down the enemployment rate to 8% within one year. However, an economists disagrees as it is non consistent with macroeconomic research. -who is correct? the treasury official or the economist and why?In Okunland, a country whose economy operates according to Okun's law, real GDP equals $7,520 billion, potential GDP equals $8,000 billion, and the actual unemployment rate is 8 percent. What is the natural rate of unemployment in Okunland? Multiple Choice 11 percent 2 percent 5 percent 6 percentWhich statement about the AS curve is correct? A. The AS curve shows the relationship between the quantity of real GDP supplied and potential GDP when all other influences on production plans remain the same. B. On the AS curve, t he quantity of real GDP supplied equals potential GDP at the price level at which the real wage rate is at its full-employment equilibrium level. C. Along the AS curve, a rise in the price level brings a decrease in the quantity of real GDP supplied. D. Along the AS curve, a change in the price level brings an equal percentage change in the money wage rate.
- Suppose the economy is self-regulating and the (actual) unemployment rate is less than the natural unemployment rate. This means that the economy is producing a level of output a. above its naturel level and will eventually cut back on output b. below its natural level and will eventually increase output c. below its natural level but no forces exist to automatically increase output d. above its natural level and institutional constraints will automatically be reduced so as to allow the economy to continue producing this level e. none of the aboveAssume that the unemployment rate (U) equals 8 %. Suppose that the natural rate of unemployment (U*) equals 5 % and the coefficient σ is 0.6. Use Okun’s law to answer the following: A.) Find the output gap ratio to the potential output? B.) If the potential output equals 160, calculate the actual output?a) Which of the following is not true? Frictional unemployment on the labor market arises from a lack of information in the labor market Cyclical unemployment exists because of a recession It is logically impossible for both the unemployment and the employment rates to both simultaneously increase or decrease together Structural unemployment exists because of mismatched worker skills and job availability Full employment requires that no cyclical unemployment exists on the labor market b) Suppose we have the following: (4th order) Value of trees $5 per tree and 1,000 tree harvested; (3rd order) 1,000 trees fabricated in to $25 wood pulp per ton (1,000 tons): (2nd order) 50,000 rolls of facial tissue ($10 each); (1st order consumer goods) of 30,000 boxes of Kleenex tissue at Safeway for $1 each. Which of the following it the correct calculation of GNP? $540,000 $400,000 $450,000 30,000 None of the above is correct
- No written by hand solution Is the economy experiencing a negative (recessionary) output gap where potential > actual output or is the economy in a positive inflationary output gap where output > potential output? Is the United States economy experiencing full employment of labor and capital? What evidence is there?Suppose that in the year of 2020, Country A’s natural rate of unemployment was 5% and its actual unemployment rate was 7%. Further, the Country’s GDP in 2020 was $20,932 billion. Compute the Country’s potential GDP in 2020, using Okun's law.a) If a country's natural unemployment rate is 5.5 percent and its actual unemployment rate is 3.5 percent, what is its cyclical unemployment rate? ___________percent Instructions: Enter the value for the output gap as an absolute number. b) According to Okun's law, this country would have (Click to select) a recessionary an expansionary output gap of _________percent.