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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