In Macroland, Potential Output Equals $100 Trillion and the Natural

question 94

Multiple Choice

In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 5 percent, then real GDP must be:

• A)$98 trillion.
• B)$96 trillion.
• C)$102 trillion.
• D)$104 trillion.

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Definitions:

Discomfort Justification

The process of creating a reason or justification for enduring an unpleasant experience, often to reconcile cognitive dissonance.

Symbolic Self-Completion

A psychological theory suggesting individuals seek to acquire and display symbols that reflect their self-identity, especially when their identity is in question.

Induced Hypocrisy

A psychological state or condition whereby individuals are made to recognize the contradiction between their attitudes and behavior, often to prompt a change.

Paradigm

A typical example or pattern of something; a model that is especially prevalent in scientific theories or how particular sets of rules define a scientific discipline.