Ending each chapter and appendix in the text are the chapter summary, review questions and problems. You are to review the chapter summary and then prepare answers to the following problems:
1. (a) Suppose the real GDP is currently $97 billion per year and natural real GDP is currently $100 billion. Measured as a percentage, what is the GDP gap?
$100 - $97/100 = 3
The GDP gap is 3%
(b) Suppose natural real GDP is growing by $4 billion per year. By how much must real GDP have risen after two years to close the GDP gap?
$108 Billion − $97 Billion = $11 Billion
2. Assume that gross private domestic investment is $800 billion and the government (state, local and federal combined) is currently running a $400 billion deficit. If households and businesses are saving $1000 billion, what is the value of net exports? Use equation (2.6) to explain your answer.
T – G = (I + NX) – S
-400 billion = ($800 billion + Net exports) - $1000 billion
$600 billion = $800 billion + Net exports
-$200 billion = Net exports
5. If nominal GDP is $10,608 and real GDP is $10,400, what is the value of the GDP deflator?
$10,608/$10,400 = 1.02
The value of the GDP deflator is 1.02
10. In 2009, civilian employment was 139,877,000 and unemployment was 14,265,000. What was the unemployment rate?
14,265,000 / (139,877,000+14,265,000) x 100 = 9.2
The unemployment rate is 9.2 %