Economics: The Basics 1st Edition by Mike Mandel

Exercise 3

The following table gives the potential GDP and real GDP for a very small economy, both measured in 2000 dollars.

a) Fill in the column for the output gap.
b) Would you expect the unemployment rate to be higher in 2002 or 2004? Explain.
c) In which year would you expect it to be easiest to find a job? (Assume that the NAIRU is the same each year)