Question

Macroeconomics Chapter 8

Saved LO onts Refer to the "In the News" below: IN THE NEWS SHARPEST ECONOMIC DECLINE IN 26 YEARS It's all bad news on the economic front. The government reported yesterday that the U.S economy suffered its biggest decline in 26 years in the last quarter of 2008. According to the Department of Commerce, gross domestic product (GDP) fel at an annual rate of 3.8 percent--the largest drop since the first quarter of 1982 Spending was down across the board, especially in the critical area of big-ticket durable goods (down 22 percent) Economists are worried that the plunge in spending will continue, pushing the US economy into another recession Source News reports of January 30, 2009 eBook Print References Instructions: In part a, enter your response as a percent rounded to one decimal place, in parts and c, enter your responses rounded to the nearest whole number a. By what percentage did GDP decline in 2008? 38 percent b. At that rate how much output would have been lost in the S14 trilion economy of 2008? billion c. How much income did this represent for each of the 300 million US citizens? M < Prov 5 of 5 Nox Type here to search E ol

Answer 1

a. 532

Since the output was down 3.8% in 2008, it means GDP is down by 3.8%. GDP is the sum of all things produces in the economy.

Lost output = 3.8% * 14,000,000,000,000

= 532,000,000,000 or 532 billion

b.1773

The population of the country was 300 million so per capita GDP is 14 trillion/300 million

= 46,666.

After output is down by 532 billion, every person lost

= 532 billion/300 million

=1,773