--%>
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 : Aggregate expenditure Normal 0 false

    Normal 0 false false

  • Q : Near monies Normal 0 false false false

    Normal 0 false false

  • Q : What are Salaries and Wages Supplement

    Salaries and Wages Supplement: The annual publication issued in a while after the Governor's Budget, including a summary of all positions by department, unit, and categorization for the past, present, and budget years, as of July 1 of the present year

    		•
  • Q : Describe advantages and the

    Describe advantages and the disadvantages of new stock issue? A new stock issue increase funds and decreases the riskiness of the firm. This also tends to send a negative signal to the market as many investors believe a company would just sell

    		•
  • Q : Describe the equilibrium price and

    Assume the total demand for wheat and the net supply of wheat per month in the Kansas City grain market are as: 16_Table for wheat.png

    		•
  • Q : Association of net present value to

    Normal 0 false false

    		•
  • Q : Why too little debt is as unwanted as

    If an optimal capital structure exists, describe reasons why too little debt is as unwanted as is too much debt? Too little debt may be as unwanted as too much debt since if a firm contains a very conservative capital structures it may be losing

    		•
  • Q : What is Budget Change Proposal Budget

    Budget Change Proposal (BCP): It is a proposal to modify the level of service or funding sources for activities sanctioned by the Legislature, suggest new program activities not presently authorized, or to remove existing programs.

    Q : How long do business cycles remain

    Normal 0 false false

  • Q : Determine equilibrium quantity

    Following equations denote market for widgets Demand: P = 10 - Q Supply: P = Q - 4 Here P mentions the price in dollars per unit and Q mention the quantity in thousands of units. A

    		•