308 words - 2 pages

A. Suppose that real GDP is currently $97 billion per year and natural real GDP is currently $100 billion. Measured as a percentage, what is the GDP gap?

Natural Real GDP – Real GDP/ Natural Real GDP

$100 - $97/100 = 3

The GDP gap is 3%

B. Suppose natural real GDP is growing by $4 billion per year. By how much must real GDP have risen after two years to close the GDP?

By the second year ...view middle of the document...

Chapter 5

#2 Assume that gross private domestic investment is $800 billion and the government is currently running a $400 billion deficit. If households and businesses are saving $1,000 billion, what is the value of net exports? Use equation 2.6 to explain answer.

2.6 equation = T – G = (I + NX) – S. The equation would need to be rearranged because both government and households and businesses are in a deficit is means the value of net exports would need to be a negative number. So, the equation is then arranged to NX = S – I (G –T) = 100- 800- 400= -200. In conclusion the value of net exports is – 200.

#5 if nominal GDP is $10,608 and real GDP is $10,400, what is the value of the GDP deflator?

The value of the GDP deflator is 1.02. You divide $10,608/$10,400 and it equals 1.02.

#10 In 2009,civilian employment was 139,877,000 and unemployment was 14,265,000. What was the unemployment rate?

The unemployment rate is 9.2 %

14,265,000 / (139,877,000+14,265,000) x 100 = 9.2

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