Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 15CQ
(a)
To determine
Describe the quantity of
(b)
To determine
Explain the situation is the long-run equilibrium level of GDP or not.
(c)
To determine
Explain the relationship between the actual and natural rate of
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What are the two biggest recessions in terms of length and magnitude from the graph, the shaded areas show recession and 2020 is not included?
How does the unemployment rate react during the two main recessions you have identified?
What was the level of the unemployment rate during the first and the last quarter of negative growth for those two recessions?
What do you conclude about the link between recession and the variation in unemployment?
Consider the following table and identify equilibrium GDP. If the potential GDP is at 12.0, what can you conclude about price levels
and the unemployment rate?
Current Price Level Real GDP-quantity demanded per trillion Real GDP-quantity supplied per trillion
6.0
10.0
8.0
120
115
110
100
11.0
13.0
8.0
6.0
5.0
The economy has high unemployment but experiences stable price levels because the economy operates below the
potential GDP.
O The economy has stable price levels and low unemployment because it is operating above the potential GDP.
O
The economy is experiencing rising price levels and has a low unemployment rate because it is operating above the
potential GDP.
I need some help figuring out how to draw these graphs. Thank you
Suppose the economy of Hawkland is initially at full employment. Currently real GDP is $20 trillion, the price level is 120, the money wage is $36/hour, the full employment quantity of labor is 300 billion hours per year, and the current unemployment rate is 6%
Draw a fully labeled graph depicting the aggregate labor market in Hawkland.Be sure to label all axes and include numerical values for variables on the axeswhere relevant. Provide a brief explanation to the side and show any necessary calculations.Label any relevant curves with a zero subscript (ex: LS0) and use a zero in a circle to clearly label the initial equilibrium.
Part 2- Draw a fully labeled graph depicting the aggregate goods and services market in Hawkland.Be sure to label all axes and include numerical values for variables on the axes where relevant. Provide a brief explanation to the side and show any necessary calculations.Label any relevant curves…
Chapter 9 Solutions
Economics: Private and Public Choice
Knowledge Booster
Similar questions
- Suppose the real GDP of an economy is $440 bilition dollars and its unemployment rate is 6%. If the natural rate of unemployment is estimated at 4%, what is the value of the country's potential GDP (LAS) in billions of dollars? Value of the country's potential GDP (LAS) is $ .......billion.arrow_forwardThe figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your responses below rounded to one decimal place. a. The size of its recessionary gap is $ .b. The size of this gap as a percentage of its actual GDP is %.c. If the natural rate of unemployment is 1%, use Okun’s law to calculate the amount of actual unemployment in Altrua. The actual rate of unemployment is %. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.arrow_forwardSuppose the economy of Hawkland is initially at full employment. Currently real GDP is $20 trillion, theprice level is 120, the money wage is $36/hour, the full employment quantity of labor is 300 billionhours per year, and the current unemployment rate is 6%. Draw a fully labeled graph depicting the aggregate goods and services market in Hawkland.Be sure to label all axes and include numerical values for variables on the axes where relevant. Providea brief explanation to the side and show any necessary calculations. Label any relevant curves with azero (0, for example: AD0) and use a zero in a circle to clearly label the initial equilibriumarrow_forward
- In the above figure, for a shift from AD1 to AD2, the aggregate demand decreases by 1) 110. 2) 10.4. 3) 0.8. 4) 0.4.arrow_forwardHow does the increase in interest rates raise the chances of a recession? How can we expect the increase in interest rates to affect the consumption of the poorest 20% and richest 20% of households?arrow_forwardA futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to the buyer, where X is 100 times the growth rate in nominal GDP from last year to this year. For example, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100). Nominal GDP last year was $28,137 billion. Contracts on the futures markets are currently selling for $460. What is the market's prediction for nominal GDP this year? Put your answer in billions. You may round to two decimal places.arrow_forward
- how do we answer this?arrow_forward2. Briefly explain the relationship between equilibrium real GDP and the unemployment rate.arrow_forwardConsider an economy that initially has a labor force of 2,000 workers. Of these workers, 1,900 are employed. The economy enters a recession. The number of employed workers falls by 4%. In addition, 0.2% of the labor force becomes discouraged at the prospect of finding a job and leaves the labor force. Show your calculation for the following. a. How many workers are unemployed before the recession? What is the unemployment rate before the recession? b. After the recession begins, what is the size of the labor force? How many workers are employed? How many workers are unemployed? What is the unemployment rate? c. Suppose that total output falls by 8% in the recession, what is the value of the Okun's law coefficient relating the loss of output to the increase in unemployment?arrow_forward
- “Households tend to increase their spending during a recession because they realize that more spending will cause firms to hire more workers and the problem of unemployment will be solved.” Do you agree or disagree? Explain.arrow_forwardDescribe what RGDP does between 2019 and 2021. What was the highest value in 2019 (peak) and what was the lowest value (trough) and when? How much did RGDP fall between these two points in time? How long did it take the economy to return to the peak value in 2019?arrow_forwardThe graph shows an aggregate demand curve. Draw a curve that shows the effect on aggregate demand of an increase in the expected future inflation rate. Label it. 140- 130- 120- 110- 100- 90- Price level (GDP deflator, 2009=100) AD 99 80+ 11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0 Real GDP (trillions of 2009 dollars)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Survey of Economics (MindTap Course List)
Economics
ISBN:9781305260948
Author:Irvin B. Tucker
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax