--%>
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 : Define Claim Schedule Claim Schedule :

    Claim Schedule: It is a request from a state department to the State Controller's Office to distribute payment from a legal appropriation or account for a legal state obligation. The claim agenda recognizes the appropriation or account to be charged,

    		•
  • Q : What is Recall and Redemption What is

    What is Recall and Redemption:Recall: The power of electors to eliminate an elected officer.Redemption: This is the act of redeeming a bond or other security by issuing an agency.

    		•
  • Q : Effect of foreign imports Normal 0

    Normal 0 false false

    		•
  • Q : Influence the economy in short run and

    Normal 0 false false

  • Q : Externally held public debt and

    Normal 0 false false

  • Q : Which ratios would banker is most

    Which ratios would banker is most interested while considering whether to approve an application for short-term business loan? Describe.Bankers and other lenders employ liquidity ratios to distinguish whether to extend short-term credit to a fir

    		•
  • Q : Purchasing power parity of US and

    Under what condition would the U.S. dollar and the Canadian dollar said to be have achieved purchasing power parity? The U.S. dollar and the Canadian dollar would be assumed to have achieved purchasing power parity while the exchange rate reflec

    		•
  • Q : What are the Changes in Authorized

    Changes in Authorized Positions (“Schedule 2”): This is a schedule in the Governor’s Budget which reflects staffing changes made following to the adoption of the present year budget and enacted legislation. This planned document modi

    		•
  • Q : Describe most conservative capital

    Describe most conservative type of working capital financing plan a company could implement? clarify. An all equity capital structure would be the most conservative kind of working capital financing plan approach. The more long-term financing

    		•
  • Q : Explain Equity Financing Equity

    Equity Financing: New or small businesses might find it hard to get debt financing therefore they turn to equity funding. The Equity financing frequently comes from non-professional investors like family, friends, or employees. This can as well come f

    		•