Explain the difference between potential gdp and actual gdp

Reference no: EM133460761

Questions:

1. Explain the difference between potential GDP and actual GDP. Relate each of them to the long run and short run models we've learned about.

2. Since 1980 there have been 5 recessions. Roughly what years did they occur?

3. Compare/contrast each one with respect to severity and length of time to return to potential.

Now compare the GDP graph to the https://fred.stlouisfed.org/series/FEDFUNDS over that time period.

4. For each recession - What was the federal funds rate just prior to the recession starting? How low did it go in response? What was the total amount it decreased?

5. What differences do you observe regarding the FFR for each recession? How does this relate to your analysis in #3?

6. Summarize the issue of zero bound interest rates.Links to an external site. Make some connections to your response for

Reference no: EM133460761

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