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

question 93

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 the output gap equals:

• A)−1 percent.
• B)−2 percent.
• C)1 percent.
• D)2 percent.

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Definitions:

Consolidated Additional Paid-in Capital

The excess amount investors pay over the par value of shares, aggregated from all subsidiaries of a parent company and reported on the consolidated financial statements.

Additional Paid-in Capital

The amount of money investors have paid for shares above their nominal value during the issuance of stock.

Voting Shares

Shares of a company that grant the shareholder the right to vote on company matters, such as electing the board of directors.

Fair Value

A projected cost at which property or obligation can be swapped among aware, agreeable individuals in a transaction without any undue pressure.