ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an excess of imports over exports.
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low rate of unemployment.
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a high rate of unemployment.
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a sharply rising price level.
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Detailed explanation-1: -If the GDP gap is negative then the potential GDP > the actual GDP and economy is not producing as much as possible. This is how much more output could have been produced if there was full employment. The GDP gap then is the lost output caused by not having full employment.
Detailed explanation-2: -A negative gap means that there is spare capacity, or slack, in the economy due to weak demand.
Detailed explanation-3: -A large positive GDP gap, on the other hand, generally signifies that an economy is overheated and at risk of high inflation. The difference between real GDP and potential GDP is also known as the output gap.
Detailed explanation-4: -A high unemployment rate implies a high level of GDP. A discouraged worker is another name for the unemployed. Frictional and structural unemployment are part of the natural rate of unemployment. If the CPI for year 1 is 150 and the CPI for year 2 is 165, the inflation rate is 10%.
Detailed explanation-5: -Proposed by economist Arthur Okun in 1962, it basically states that if GDP grows rapidly the unemployment rate declines, if growth is very low or neg-ative the unemployment rate rises, and if growth equals potential the unemploy-ment rate remains unchanged.