Question

A. Using the seasonally adjusted CPI-U, what was the inflation rate from December 2018 to December 2019 rounded to the nearest hundredth of a percent?

B. What was the (U-3) unemployment rate in December 2019 rounded to the nearest tenth of a percent?

C. What was real potential GDP for the 4^th quarter of 2019 rounded to the nearest billion dollars? (Do not include the word billion in your answer)

D. What was real GDP for the 4^th quarter of 2019 rounded to the nearest billion dollars?  (Do not include the word billion in your answer)

E. What was the base year used to calculate real GDP in your answers to C and D?

F.  Do your answers indicate there was an inflationary gap, a recessionary gap, or no gap in the last quarter of 2019?

Answer 1

A.

CPI-U for December 2018 is 251.233

CPI-U for December 2019 is 256.974

The inflation rate from December 2018 to December 2019 rounded to the nearest hundredth of a percent based on CPI-U is:

(256.974 - 251.233)/251.233 = 0.022851 = 2.29%

B.

It shall be noted that the U-3 unemployment rate is the official unemployment rate of the US.

As of December 2019, the U-3 unemployment rate is 3.5%

C.

The real potential GDP for the 4th quarter of 2019 rounded to the nearest billion dollars is 19100

Refer to Federal Reserve Economic Data - GDPPOT

D.

The real GDP for the 4th quarter of 2019 rounded to the nearest billion dollars is 19222

Refer to Federal Reserve Economic Data - GDPC1

E.

The base year used to calculate real GDP is 2012

F.

Since, real GDP at 19222 billion US $ is greater than real potential GDP at 19100 billion US $ as of December 2019, it indicate that there is inflationary gap in the Q4 of 2019