--%>
Assignment Help - homework help

Cyclical unemployment

Suppose that in a specific year the natural rate of unemployment is 5 percent and the actual rate of unemployment is 9 percent. Employ Okun's law to fin out the size of the GDP gap in percentage-point terms. If the nominal GDP is $500 billion in that year, how much output is being foregone due to cyclical unemployment?

E

Expert

Verified

GDP gap = 8 % [= (9 – 5) ´ 2]; forgone output = $40 billion (= 8% of $500 billion).

   Related Questions in Finance Basics

  • Q : Describe factors cause change in

    Normal 0 false false

    		•
  • Q : Describe usual pattern of cash flows

    Describe usual pattern of cash flows for share of preferred stock? How does the market fidn out the value of a share of preferred stock, given these promised cash flows?Preferred stock contains no maturity date hence, it has no maturity value.

    		•
  • Q : Creative destruction Normal 0 false

    Normal 0 false false

    		•
  • Q : Define the term State Fiscal Year

    Define the term State Fiscal Year: This is the period beginning from July 1 and continuing through the subsequent June 30.

    		•
  • Q : Define Spot Bill Spot Bill : It is an

    Spot Bill: It is an introduced bill which makes non-substantive modifications in a law, generally with the intent to amend the bill at a later date to comprise substantive law modifications. This procedure gives a means for circumventing the deadline

    		•
  • Q : Assignments i want to write final state

    i want to write final state report. My state is Texas.

    		•
  • Q : Do mergers result in layoffs Do mergers

    Do mergers result in layoffs?Entire employment in the banking industry in fact has increased slightly over the last ten years. Some mergers do result in layoffs. Though, several banks demolish their staff largely through attrition to ease the tr

    		•
  • Q : What is Enrolled Bill Report Enrolled

    Enrolled Bill Report (EBR): The analysis prepared on Legislative measures passed by both houses and passed on to the Governor, to give the Governor’s Office with information relating to the measure with a recommendation for action by the Governo

    		•
  • Q : Explain Appropriated Revenue

    Appropriated Revenue: The revenue which, as it is earned is reserved and appropriated for a particular aim. An illustration is student fees received by state colleges which are by law appropriated for the support of the colleges. The

    		•
  • Q : Explain 3-year Expenditures and

    3-year Expenditures and Positions: The display at the beginning of each departmental budget which presents the different departmental programs by title, dollar totals, places, and source of funds for the past, current, and budget years.

    		•