MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 9, Problem 3P
To determine
The GDP gap and the output forgone.
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Assume that in a particular year the natural rate of unemployment is 5 percent and the actual rate of unemployment is 9 percent. Use Okun’s law to determine the size of the GDP gap in percentage-point terms. If the potential GDP is $500 billion in that year, how much output is being forgone because of cyclical unemployment?
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 the future?
Instructions: Enter your answer as an absolute number.
According to Okun's law, if a country's recessionary output gap grows by 5 percent, then its cyclical unemployment rate will
increase
by
percent.
Chapter 9 Solutions
MACROECONOMICS W/CONNECT
Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQCh. 9 - Prob. 11RQCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - Prob. 8P
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- If the cyclical unemployment rate is 1.31% and the economy is producing at 92% of potential output, how sensitive is the unemployment rate to short-run changes in GDP? Write your answer as a fraction and don't forget the minus sign. Round your answer at two (2) decimals.arrow_forwardThe figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimal place. Price level 340 360 380 400 420 440 460 480 500 520 Real GDP AS AD 60 LAS a. The size of its recessionary gap is $ b. The size of this gap as a percentage of its actual GDP is c. If the natural rate of unemployment is 3%, use Okun's law to calculate the amount of actual unemployment in Altrua The actual rate of unemployment is 15 %.arrow_forwardThe table below shows unemployment and labor force statistics for an economy. a: Calculate the size of the labor force. b: Calculate the labor force participation rate. c: Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. d: Given the state of the economy described in the table, is actual real output less than, greater than, or equal to potential real output? Explain. e: Suppose discouraged workers reenter the labor force and find employment. Will the actual rate of unemployment increase, decrease, or stay the same? Actual rate of unemployment 3% Natural rate of unemployment 4% Population of the country 125 million Number of people employed 97 million Number of people unemployed 3 million Number of people employed part time 5 million Number of people discouraged workers 2 millionarrow_forward
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