Question

• Suppose real GDP grew at a rate of 4% last year and the current unemployment rate is 3.5%. The current inflation rate is 2.5%. How would you describe this economy?

  • In a recessionary gap where current income and production are below the full employment level

  • In an inflationary gap where current income and production are above the full employment level

  • At a long-run equilibrium

Answer 1

Answer

The Gross domestic Product of the country is its total monetry value or we could say market value overall of the finished goods and service for a specific time like one eyar or financial year .The GDP is measured in context of the population growth rate also .The GDP should always stay ahead of the population growht .The America population growth in 2017 stood at 0.7 percent and according to this A GDP of 3 percent is good which means that we are grwoing faster than the populatio. Therefore In this case the country with 4 % GDP i srepresenting a good econo y of finished goods and service .The Unemployement rate is 3.5% which is not a serious concern because after the 2010 where the unemployement rate was 10 % comparable to this 3.5 % , the economy is very much better .This should be little to be improved and should always be minimum so that jobless people are less .The inflation rate is 2.5 % and the policy maker believe that the acceptable inflation rate should be around 2 percent or a bit low .The inflation should should not be high .In this case the inflatinon rate is greater than 2 % which cause the devaluation of currency but it will not have a great impact on the economy .Overall the economic situaton based on the data seems to be stable and progressive in nature .

HAVE A GOOD DAY !