Suppose the price level is 132, the quantity demanded of Real GDP is $4,000B, the quantity supplied of Real GDP in the short run is $4,000B, and the quantity supplied of Real GDP in the long run is $3,700B. The natural rate of unemployment for this economy is 5%.
a. Is the economy in short-run equilibrium? What is the equilibrium level of Real GDP and Price?
b. Is the economy in long-run equilibrium? Explain.
c. If this economy in an inflationary or recessionary gap? What is the size of the gap?
d. Is cyclical unemployment rate greater or less than zero? Explain
a. Is the economy in short-run equilibrium? What is the equilibrium level of Real GDP and Price?
b. Is the economy in long-run equilibrium? Explain.
c. If this economy in an inflationary or recessionary gap? What is the size of the gap?
d. Is cyclical unemployment rate greater or less than zero? Explain