happened 7. Measuring Y, and Ỹ₁: A real-world problem faced by policymakers, forecasters and businesses every day is how to judge the state of the economy. Consider the table below, showing hypothetical measures of real GDP for each quarter (three-month period) in the coming years, starting at a level of $25.0 trillion in 2023Q1 (the first quarter of 2023). Actual output Y₁ Year 2023Q1 25.00 2023Q2 25.20 2023Q3 25.40 202304 25.30 2024Q1 25.20 202402 25.15 202403 25.13 202404 25.30 2025Q1 25.50 202502 26.00 2025Q3 26.80 202504 27.10 Potential output Y₁ Y₁ - Y₁ Short-run output Ỹ₁ Growth rate of actual output %4Y Now fill in the remaining columns of the table by answering the following questions. you (a) What is potential output in 2023Q1? You could call this a trick question, since there's no way for you to know the answer! In a way, that's the main point: fundamentally, we have to take some other measurements and make some assumptions. Suppose your research assistant tells that in 2023Q1, business surveys, unemployment reports, and recent years' experi- ence suggest that the economy is operating at potential output, equal to $25.0 trillion. So go ahead and write 25.0 for potential in this year. (b) Assume potential output grows at a constant annual rate of 2.5%, and complete the remainder of the table. Hint: What is the growth rate in each quarter?
happened 7. Measuring Y, and Ỹ₁: A real-world problem faced by policymakers, forecasters and businesses every day is how to judge the state of the economy. Consider the table below, showing hypothetical measures of real GDP for each quarter (three-month period) in the coming years, starting at a level of $25.0 trillion in 2023Q1 (the first quarter of 2023). Actual output Y₁ Year 2023Q1 25.00 2023Q2 25.20 2023Q3 25.40 202304 25.30 2024Q1 25.20 202402 25.15 202403 25.13 202404 25.30 2025Q1 25.50 202502 26.00 2025Q3 26.80 202504 27.10 Potential output Y₁ Y₁ - Y₁ Short-run output Ỹ₁ Growth rate of actual output %4Y Now fill in the remaining columns of the table by answering the following questions. you (a) What is potential output in 2023Q1? You could call this a trick question, since there's no way for you to know the answer! In a way, that's the main point: fundamentally, we have to take some other measurements and make some assumptions. Suppose your research assistant tells that in 2023Q1, business surveys, unemployment reports, and recent years' experi- ence suggest that the economy is operating at potential output, equal to $25.0 trillion. So go ahead and write 25.0 for potential in this year. (b) Assume potential output grows at a constant annual rate of 2.5%, and complete the remainder of the table. Hint: What is the growth rate in each quarter?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Please show work in step by step using the required formula
Transcribed Image Text:this ever happened
7. Measuring Y, and Y₁: A real-world problem faced by policymakers, forecasters,
and businesses every day is how to judge the state of the economy. Consider
the table below, showing hypothetical measures of real GDP for each quarter
(three-month period) in the coming years, starting at a level of $25.0 trillion
in 2023Q1 (the first quarter of 2023).
Actual
output
Y₁
Year
2023Q1
25.00
2023Q2
25.20
2023Q3 25.40
202304 25.30
2024Q1 25.20
2024Q2
25.15
202403 25.13
202404
25.30
2025Q1 25.50
202502
26.00
2025Q3 26.80
202504
27.10
Potential
output
Y₁
Y₁ - Y₁
go
Short-run
output
Ỹ₁
Growth rate
of actual
output %AY
Now fill in the remaining columns of the table by answering the following
questions.
(a) What is potential output in 2023Q1? You could call this a trick question,
since there's no way for you to know the answer! In a way, that's the
main point: fundamentally, we have to take some other measurements and
make some assumptions. Suppose your research assistant tells you that in
2023Q1, business surveys, unemployment reports, and recent years' experi-
ence suggest that the economy is operating at potential output, equal to
ahead and write 25.0 for potential in this year.
$25.0 trillion. So
(b) Assume potential output grows at a constant annual rate of 2.5%, and
complete the remainder of the table. Hint: What is the growth rate in
each quarter?
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