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?

Expert Solution

Rahul Sunny answered 2 years ago

(15 pts) (a) What is the difference between actual (nominal) GDP and real GDP? a. Which...

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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?

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What is the difference between a model and actual data?

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