--%>
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 : What is Uniform Codes Manual Uniform

    Uniform Codes Manual (UCM): It is a document sustained by the Department of Finance that sets standards for codes and different other information employed in state fiscal reporting systems. Such codes recognize, for illustration, prog

    		•
  • Q : Explain intermediation Explain

    Explain intermediation.The financial system makes it achievable for surplus and deficit economic units to come together, exchanging funds for securities, to their mutual profit. While funds flow from surplus economic units to a financial institu

    		•
  • Q : Describe factors cause change in

    Normal 0 false false

    		•
  • Q : Financial strategy describe the sales

    describe the sales forecasting process ?

    		•
  • Q : Investors prospects of growth Why might

    Why might investors overestimate the prospects of growth companies and underestimate value companies?

    		•
  • Q : Define Programs Programs : The

    Programs: The activities of an association grouped on the basis of common objectives. The programs are included of elements that can be further classified into tasks and components.

    		•
  • 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 working of accounts receivable

    Explain working of accounts receivable factoring? And describe benefits to the two parties involved and risks? Factoring is while one firm sells accounts receivable (AR) to another. The purchasing firm is termed as a factor. The factor earns

    		•
  • Q : Shapes of marginal-cost and the

    Normal 0 false false

    		•
  • Q : Describe the risk-return relationship

    Describe the risk-return relationship.The relationship among risk and required rate of return is term as the risk–return relationship.  This is a positive relationship since the more risk assumed, the higher the required rate of retur

    		•