Homework Answers
(a) Potential GDP in 1929 = 1006.3 trillions of dollar
Potential GDP in 1930 = 1094.1 trillions of dollar
Growth rate in potential GDP from 1929 to 1930 = [(1094.1 - 1006.3) / 1006.3] * 100
Growth rate in potential GDP from 1929 to 1930 = 8.725%
Growth rate in potential GDP from 1929 to 1930 = 8.73%
Answer: 8.73%
(b) Output gap = Actual GDP - Potential GDP.
Year 1929
Actual GDP = 1005.6 trillions of dollar
Potential GDP = 1006.3 trillions of dollar
Output Gap = 1005.6 trillions of dollar - 1006.3 trillions of dollar
Output Gap = -0.7 trillions of dollar.
Year 1930
Actual GDP = 965.8 trillions of dollar
Potential GDP = 1094.1 trillions of dollars.
Output Gap = 965.8 trillions of dollar - 1094.1 trillions of dollar.
Output Gap = =-128.3 trillions of dollar.
Actual GDP falls short by 0.7 trillion from potential GDP in the year 1929.
Actual GDP falls short by 128.3 trillion from potential GDP in the year 1930.
It means the output gap in 1930 is larger than the output gap in 1929.
Therefore, in the year 1930, the unemployment rate is higher.
Answer: 1930.
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Price level LRAS1929 SRAS1930 LRAS1930 SRAS19 (GDP deflator, 2009-100) 10 10.6 10.2 965.8 1005.6 10063 1094.1...
Consider the aggregate economy for the United States in 1929 and 1930, represented by the graph below. What is the rate of growth in real GDP, if any? Provide your answer as a percent rounded to two...
Consider the aggregate economy for the United States in 1929 and 1930, represented by the graph below. What is the rate of growth in real GDP, if any? Provide your answer as a percent rounded to two decimal places. Use a negative sign "-" for negative changes. Do not include any symbols, such as "S," ", "%," or "," in your answer. LRAS1929 SRASi LRAS1930 SRAS1929 Price level (GDP deflator, 2009 100) 10.6 10.2 AD1930 D1929 965.8 1005.6 1006.3 1094.1...
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10.3 Extra Problem 1 Question Help Price level (GDP deflator, 2009=100) The Bureau of Economic Analysis reported that real GDP during the second quarter of 2007 was $11.5 trillion and the GDP deflator was 120. The Congressional Budget Office estimated potential GDP to be $11.6 trillion in 2007 For the year 2007, draw: 1) the long-run aggregate supply curve 2) the aggregate demand curve 3) the short-run aggregate supply curve. Make the curves consistent with the numbers above and label...
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Consider the aggregate economy for the United States in 1929 and 1930, represented by the graph below. What is the rate of growth in real GDP, if any? Provide your answer as a percent rounded to two decimal places. Use a negative sign "-" for negative changes. Do not include any symbols, such as "S," ", "%," or "," in your answer. LRAS1929 SRASi LRAS1930 SRAS1929 Price level (GDP deflator, 2009 100) 10.6 10.2 AD1930 D1929 965.8 1005.6 1006.3 1094.1...
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Consider the aggregate economy for the United States in 2007 and 2008, represented by the graph below. In which year is the unemployment rate higher? Price level (GDP deflator, 2009 = 100) LRAS2007 SRAS2008 LRAS2008 SRA $2007 99.2 A 97.3 AD2007 AD2008 14.83 14.84 14.88 15.20 Real GDP (trillions of 2009 dollars) The unemployment rate is higher in 2007. The unemployment rate is equal in the two years. The unemployment rate is higher in 2008. It cannot be determined from...
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LAS 250 SAS 200 FO Price level (GDP deflator 2000 = 100) 150 OH E OK 100 50 50 0 8 9 10 11 Real GDP (trillions of 2000 dollars) In the above figure, which movement illustrates the impact of a constant price level and a rising money wage rate? 1) E to J 2) E to H 3) E to F 4) E to 1
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