Suppose That the Gap Between Potential GDP and Actual GDP

question 30

Multiple Choice

Suppose that the gap between potential GDP and actual GDP equals three times the difference between the natural rate of unemployment and the actual rate of unemployment. If the natural rate of unemployment is 5 percent, the actual rate is 6 percent, and real GDP equals $6,000, then potential GDP must equal

• A) $6,185.
• B) $6,180.
• C) $5,820.
• D) $5,825.
• E) $6,000.

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Definitions:

Legal Pluralism

The existence of multiple legal systems within a single geographic area, where different laws govern different groups of people.

Cross Cultural

Pertaining to or comparing two or more different cultures, analyzing differences and similarities in behaviour, customs, and values.

Individualism/collectivism Dimension

A cultural dimension that measures the degree to which individuals are integrated into groups and societal frameworks.

Power Distribution

The way in which power or authority is spread among individuals or groups within an organization or in the context of a negotiation.