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3 years ago

In Macroland, potential output equals exist100 trillion and the natural rate of unemployment is 4 percent.

Business

1 answer:

maxonik [38]3 years ago

7 0

Answer:

GDP gap = -2 %

GDP gap = 2%

Explanation:

given data

potential output = 100 trillion

natural rate unemployment = 4 percent

solution

we know as per the Okun's law

the GDP gap will be = -2% ( for every 1% )

the actual unemployment rate exceeds its natural rate

so here if actual unemployment rate = 5 %

GDP gap will be

GDP = ( 5% - 4% ) × -2

GDP gap = -2 %

and

when actual unemployment rate = 3%

so GDP will be

GDP gap = ( 3% - 4% ) × -2

GDP gap = 2%

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