Assignment:
This assignment replaces the second assignment in the syllabus. However, the rules on page 4 of the syllabus still apply.
Suppose that everyone anticipated that the GDP deflator would be 100 in the current period. Here are the AgD and AgS schedules for this period. (AgD and AgS are in trillions of dollars.)
|
GDP Deflator
|
AgD100
|
AgS100
|
|
80
|
18
|
7
|
|
100
|
16
|
11
|
|
120
|
14
|
14
|
|
140
|
12
|
17
|
|
160
|
10
|
20
|
a. What does "anticipated" mean in this context?
b. What is the actual GDP deflator in the current period? Explain your answer.
c. What is GDP in the current period? Explain your answer.
d. Will this level of GDP also apply in the long run? Explain your answer.
e. Is the actual rate of unemployment in the current period less than, equal to, or greater than the natural rate? Explain your answer.
Note: GDP means real GDP.