Question

2. Suppose real GDP for the US in 2018 was $20 trillion and real GDP for the US in 2019 was $25 trillion. What is the value of GDP growth 2018 to 2019? A. 5% B. 20% C. 25% D. 50% E. Not enough information 3. Inflation represents: A. an increase in output. B. an increase in the aggregate price level. C. an increase in the unemployment rate. D. all of the above E. none of the above 4. Okun's law is an empirical relationship that tells us: A. interest rates and output are negatively related. B. inflation and output are positively related. C. unemployment and output are positively related. D. unemployment and inflation are negatively related. E. none of the above. 5. In the Short Run, we assume: A. prices are fixed. B. production can adjust to meet any level of demand C. the money supply is an exogenous variable D. all of the above E. none of the above.

Answer 1

Answer

2, C.25%

Real Gdp growth=final rate - initial rate/initial rate ×100

Initial rate (2018)= $20 Trillion

Final rate (2019)= $ 25 Trillion

Real gsp growth=25-20/20 ×100

=5/20 ×100

=0.25 ×100

=25 %

3, B. An increase in the aggregate price level

Inflation is the situation where amount of money is an excess of the volume of goods available.

4, E. None of the above

Okun's law shows the inverse relationship between unemployment and production. Which means when unemployment increases then gnp and gdp decreases and vice versa.

5, A. Prices are fixed

In the short run prices are fixed because the changes in aggregate demand and aggregate supply take time to effect in the price.