Question

#16.1 The relationship between the size of the negative GDP gap and the unemployment rate is...

#16.1

The relationship between the size of the negative GDP gap and the unemployment rate is

  • undefined.

  • direct.

  • direct during recession but inverse during expansion.

  • inverse.

#17.1

If the inflation premium is 3 percent and the real interest on a loan is 4 percent, then the nominal interest rate is

  • −1 percent.

  • 0.75 percent.

  • 1 percent.

  • 7 percent.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1


16.1

Negative GDP gap exist when the potential real GDP is greater than the current equilibrium real GDP.

Increase in the negative GDP gap implies a decrease in production.

As production decreases, unemployment increases and with that unemployment rate also increases.

Thus,

The relationship between the size of the negative GDP gap and the unemployment rate is direct.

Hence, the correct answer is the option (2) [Direct].

17.1

Inflation premium = 3%

Real interest rate = 4%

Calculate the nominal interest rate -

Nominal interest rate = Real interest rate + Inflation premium

Nominal interest rate = 4% + 3% = 7%

The nominal interest rate is 7%.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The relationship between job openings and the rate of unemployment as depicted in a standard Beveridge...
The relationship between job openings and the rate of unemployment as depicted in a standard Beveridge curve, indicates that Group of answer choices low unemployment is linked to low number of job openings. during an expansionary period, unemployment rate is low and inflation is high. when unemployment is high, job openings should be increased. during a recession, unemployment rate is high and job openings are tight. there is no implied relationship between unemployment and the state of the business cycle.
Question 1 The Federal Reserve considers ideal inflation rate to be a. 0% b. 1% c....
Question 1 The Federal Reserve considers ideal inflation rate to be a. 0% b. 1% c. 2% d. 3% e. dependent on current unemployment rate Question 2 The dual mandate given to the Federal Reserve by the Congress in 1978 means that the two goals the Fed focuses on are a. low employment and low inflation b. low employment and low output c. low unemployment and high output d. low unemployment and low inflation Question 3 Okun's Law relates a....
1. the aggregate supply curve shows the negative relationship between general price and real GDP. True...
1. the aggregate supply curve shows the negative relationship between general price and real GDP. True or false 2. Other things equal, as the number of discouraged workers rises in an economy, the gap between potential and actual real GDP will widen. True or False 3. According to the expedenitures approach, gross domestic product represents the sum of consumption spending, government spending, net exports, and net investments. True or False 4. In a business cycle, a peak marks the end...
True or False 1. The loanable fund market demand is the demand for consumption. (           )...
True or False 1. The loanable fund market demand is the demand for consumption. (           ) 2. An increase in the bond price increases the bond yield. (           ) 3. An increase in the stock price increases the stock rate of return. (           ) 4. Monopoly increases unemployment, but monopsony does not. (           ) 5. The open market operation is the changes in interest rate in open market. (           ) 6. The high reserve requirement has the direct relationship with...
No explenation needed Question 211 pts If we know the average annual rate of inflation, we...
No explenation needed Question 211 pts If we know the average annual rate of inflation, we can use the "rule of 70" to: determine when the value of a real asset will approach zero. determine whether the inflation is demand-pull or cost-push. calculate the number of years required for the price level to double. calculate the accompanying rate of unemployment. Question 221 pts Suppose that a person's nominal income rises from $40,000 to $44,000 and the consumer price index rises...
1- In Beyonceland, real GDP fell continuously from $200 billion in 2015 to $160 billion in...
1- In Beyonceland, real GDP fell continuously from $200 billion in 2015 to $160 billion in 2016. Potential GDP remained constant at $180 billion. Between 2015 and 2016, Beyonceland A) went from a peak to a trough. B) had a contraction and a recession. C) went from a deflationary gap to an inflationary gap. D) went from a negative output gap to a positive output gap. E) had a growth rate of -25 percent. 2- Which factor, if included in...
The full-employment unemployment rate for the United States economy is now generally considered to be: A....
The full-employment unemployment rate for the United States economy is now generally considered to be: A. 2 percent of the labor force B. 3 percent of the labor force C. 4 to 5 percent of the labor force D. 6 to 7 percent of the labor force The economy's GDP gap is negative when actual GDP is greater than potential GDP. A. true B. false The level of total spending is the immediate determinant of the: A. Ratio of private...
5. Which of the following is true of nominal GDP? a. It acts as an indicator...
5. Which of the following is true of nominal GDP? a. It acts as an indicator of the general price level in the economy b. It measures the real level of output in the economy c. It measures national output based on the current year's prices d. It tends to rise by a smaller amount than real GDP when the general price level increases e. It measures changes in the output of intermediate goods and services 6. Because there is...
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity....
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity. B) the aggregate unemployment rate. C) the aggregate quantity of output demanded by households, businesses, the government, and the rest of the world. D) the aggregate quantity of output demanded by businesses only. 2.When the aggregate price level increases, the purchasing power of many assets falls, causing a decrease in consumer spending. This is known as the _____ effect and is a reason why...
1.         Growth rate of nominal GDP – Inflation rate   = a.         price level. b.         the growth...
1.         Growth rate of nominal GDP – Inflation rate   = a.         price level. b.         the growth rate of nominal GDP. c.         the growth rate of real GDP. d.         the growth rate of long-run trend GDP. e.         how much the economy contracts during a recession. 2.         The consumption category does not include purchases a.         of new cars made by consumers. b.         of entertainment services made by consumers. c.         of new clothing made by consumers. d.         of new houses made by consumers....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT