Reference no: EM131620083

Objectives

The purpose of the Unit Exercises is to assess the student's ability to apply the economics concepts learned in the unit to practical problem-solving scenarios.

Instructions

Students are to complete the following exercises in Word (or some other compatible word processor) and submit by 11:00 p.m. on Sunday of Units 2, 4, 6, 8, 10, and 11.

1. Consider the macroeconomic data shown below for a hypothetical country's economy.
a. Compute the output gap for each year.
b. In several years actual GDP exceeded potential GDP. Explain how GDP can exceed potential GDP.
c. In this example, real GDP has not fallen from year to year but at times it happens. When real GDP falls from year to year what do economists call such periods?
d. What is the unemployment rate when this economy is at "full employment"? What kind of unemployment exists at this time?

2. Consider the following data for a hypothetical economy that produces two goods: milk and honey.
a. Compute the output gap for each year.
b. In several years actual GDP exceeded potential GDP. Explain how GDP can exceed potential GDP.
c. In this example, real GDP has not fallen from year to year but at times it happens. When real GDP falls from year to year what do economists call such periods?
d. What is the unemployment rate when this economy is at "full employment"? What kind of unemployment exists at this time?