Refer to the Accompanying Data, Which Is for a Speci?c

question 73

Multiple Choice

$$\begin{array} { | l | c | } \hline \text { Potential Real GDP } & \$ 200 \text { Billion } \\\hline \text { Natural Rate of Unemployment } & 6 \% \\\hline \text { Actual Rate of Unemployment } & 12 \% \\\hline\end{array}$$ Refer to the accompanying data, which is for a speci?c year in a hypothetical economy for which Okun's law is applicable. The size of the negative GDP gap as a percentage of potential GDP for the
Economy is

• A) 6 percent.
• B) 9 percent.
• C) 12 percent.
• D) 15 percent.

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Definitions:

Elasticity

a measure of how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price.

Quantity Effect

The change in quantity demanded or supplied as a result of changes in price.

Price Effect

The impact that a change in the price of a good or service has on its demand or supply.

Total Revenue

The total income generated by the sale of goods or services, calculated as the product of the price per unit and the number of units sold.