Actual vs potential GDP using differing time periods. Describe the rule of 70. What is the...

Actual vs potential GDP using differing time periods.
Describe the rule of 70.
What is the is the impact of the rule of seventy on equity investments?

Expert Solution

Rahul Sunny answered 2 years ago

What is difference between actual GDP & potential GDP? If actual GDP > Potential GDP are...

What is difference between actual GDP & potential GDP? If actual GDP > Potential GDP are we in boom (expansion) or bust (recession)? If actual GDP > potential GDP is unemployment higher than NAROU or lower? What is the danger of actual GDP > potential GDP? The economy can avoid this danger if what happens?

Suppose the economy is in a recession (and actual GDP is less than potential GDP). What...

Suppose the economy is in a recession (and actual GDP is less than potential GDP). What fiscal policy actions that could be taken? On the other hand, suppose the economy is experiencing high levels of inflation (and actual GDP is higher than potential GDP)… what fiscal policy actions could be taken? Is it optimal for both the Federal Reserve and the Government to take actions at the same time to “influence” and improve economic conditions? Why or why not?

Clarion Enterprises is considering two potential investments with differing cash flow periods. This is the first...

Clarion Enterprises is considering two potential investments with differing cash flow periods. This is the first potential investment. It has the following cash flows: CF0 -98171 CF1 23100 CF2 3500 CF3 27700 CF4 12800 CF5 21200 CF6 22700 Company Cost of Capital 7 Given the above cash flows and investor's required rate of return, what is the Annualized Net Present Value for this proposed investment? Express your answers as XXXX.XX. (Note: Be sure you noticed that this is asking for...

If actual GDP is below potential GDP, then the unemployment rate is _____________ the natural rate. A)...

If actual GDP is below potential GDP, then the unemployment rate is _____________ the natural rate. A) below B) above C) right at D) cannot be determined without inflation rate Fiscal policy affects the economy through: A) Taxes B) Government Spending C) Interest Rates D) Taxes and Government Spending The Federal Reserve Bank’s decisions on monetary policy are made by the: Board of Governors B) FOMC C) Reserve Banks D) Federal Reserve Bank of New York One of the FED’s responses to the COVID crisis has been to: Lower the...

A country with a floating exchange rate is at full employment (actual GDP = potential GDP)...

A country with a floating exchange rate is at full employment (actual GDP = potential GDP) with stable prices. A new president is elected and decides to increase government spending. What will happen to actual GDP if monetary policy doesn’t change? How should monetary policy change to keep prices stable and prevent actual GDP being different from potential GDP? What will happen to the interest rate, the exchange rate, investment, consumption, and net exports in the short run when prices are...

TRUE OR FALSE a. When potential real GDP is equal to actual real GDP, there is...

TRUE OR FALSE a. When potential real GDP is equal to actual real GDP, there is no unemployment. b. A significant increase in wages will shift aggregate supply curve to the right in the short run. c. When the government decided to reduce their spending, then the aggregate supply curve will decrease or shift to the left in the short run. d. If the central Bank wants to expand aggregate demand, it can increase the money supply, which would increase...

Actual and Potential GDP (a FRED question): Using the FRED database, locate the Congressional Budget Office’s...

Actual and Potential GDP (a FRED question): Using the FRED database, locate the Congressional Budget Office’s measure of potential GDP by searching for ”GDPPOT”. Using the ”Add Data Series” option, add the series ”Real Gross Domestic Product (GDP1)” to this graph. Adjust the sliders to show the data from around 1985 to the present. (1) Display the graph. (2) Download a graph of the ”investment share of GDP” (for gross private domestic invest- ment) and display those data graphically since...

Question 75 Unsaved Clarion Auto is considering two potential investments with differing cash flow periods. This...

Question 75 Unsaved Clarion Auto is considering two potential investments with differing cash flow periods. This is the first potential investment. It has the following cash flows: CF0 -82382 CF1 41000 CF2 6100 CF3 38800 CF4 31100 CF5 9500 CF6 39100 Company Cost of Capital 9 Given the above cash flows and investor's required rate of return, what is the Annualized Net Present Value for this proposed investment for Clarion Auto? Express your answers as XXXX.XX. (Note: Be sure you...

The rule of 70 indicates that a 5% annual increase in the potential level of real...

The rule of 70 indicates that a 5% annual increase in the potential level of real GDP would lead to the potential output doubling in _______ years a. 6 b. 12 c. 14 d. 20

1) According to the rule of 70, if a country's real GDP per capita grows at...

1) According to the rule of 70, if a country's real GDP per capita grows at an annual rate of 2% instead of 3%, it will take _____ for that country to double its level of real GDP per capita. a) 11.67 additional years b)35 additional years C) 3.3 additional years D) 30 additional years --------- 2) In a closed economy, GDP = $10 trillion, Consumption = $6 trillion, and government spending is $2 trillion. Total taxes are $1.5...

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