calculate the size of the GDP gap .2013,2014,2015 with all explanations
Homework Answers
Following formulas are used for all the years
Potential GDP= (1−natural rate of unemployment)(1−actual rate of unemployment)∗(actual GDP)
Percentage GDP gap= (Actual output)−(potential output) / (potential output)
2013
Potential GDP = (1 - 0.05)/( 1 - 0.08) * 600 = 0.95/0.92 * 600 = 619.56
Percentage GDP gap=(Actual output)−(potential output) / (potential output)
= (600 - 619.56) / 619.56 = 0.0315 = 3.15%
2014
Potential GDP = 0.95/0.94 * 600 = 606.38
Percentage GDP Gap = (600 - 606.38)/ 606.38 = 0.0105 = 1.05%
2015
Potential GDP = 0.95/0.94 * 630 = 636.70
Percentage GDP Gap = (630 - 636.70)/ 636.70 = 0.0105 = 1.05%
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calculate the size of the GDP gap .2013,2014,2015 with
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