In the fourth quarter of 2004, economic statistics showed the following:
Real GDP$10,994.3 billion Unemployment rate5.4% Inflation rate2.2%The conceptual variables corresponding to these data are:
Potential output$11,144.6 billion Natural rate of unemployment5.2% Ideal inflation rate1.0%?
a.Calculate the output gap in percentage. Show your work. b.Calculate the unemployment gap in percentage. Show your work. c.Calculate the inflation gap in percentage. Show your work. d.Calculate the output loss and the inflation loss. Show your work. e.Calculate the total loss in the fourth quarter of 2004 if the weight on the inflation loss equals 1. Show your work. f.Calculate the total loss in the fourth quarter of 2004 if the weight on the inflation loss equals 5. Show your work.
What will be an ideal response?
| a. | Output gap = 100 × (10,994.3 ? 11,144.6)/11,144.6 = ?1.35% |
| b. | Unemployment gap = 5.4% ? 5.2% = 0.2% |
| c. | Inflation gap = 2.2% ? 1.0% = 1.2% |
| d. | Output loss = output gap squared = 1.82; inflation loss = inflation gap squared = 1.44 |
| e. | Loss = output loss + (weight × inflation loss) = 1.82 + (1 × 1.44) = 3.26 |
| f. | Loss = output loss + (weight × inflation loss) = 1.82 + (5 × 1.44) = 9.02 |
You might also like to view...
Considering the following two-person game, what percentage of the time should Y play strategy Y1?
Y1 Y2 X1 6 3 X2 2 8 A) 1/3 B) 2/3 C) 4/9 D) 5/9 E) None of the above
What is the purpose of the LESCANT factors? A) To deal with issues beyond the law when doing business in other countries
B) To control tariff imports and exports. C) To establish a uniform system of international contract laws. D) To eliminate grease payments. E)None of the above
Which of the following insurance type is strictly intended to provide only insurance in the event of death?
A) Whole life B) Term C) Universal life D) Variable life
Alex owns an office building which the state condemns on January 15, 2018. Alex receives the condemnation award on April 1, 2018. In order to qualify for nonrecognition of gain on this involuntary conversion, what is the last date for Alex to acquire qualified replacement property?
A) April 1, 2020 B) April 1, 2021 C) December 31, 2020 D) December 31, 2021