--%>
Assignment Help - homework help

GDP gap

"The economic cost of unemployment is measured by the GDP gap." Explain this statement. ?

E

Expert

Verified

The GDP gap refers to the gap between current GDP and the GDP that corresponds to full employment level. The latter is also called the ‘potential GDP’. When there is unemployment the economy is unable to produce at potential level and the shortfall is the cost that the economy pays in economic terms. This is the cost in economic terms as it is the ’economy’s’ loss. There are other costs of unemployment, but they are personal and restricted to the unemployed person and his family.

   Related Questions in Macroeconomics

  • Q : Limitation of credit availability What

    What occurs to economy, when credit availability is limited and credit is made costlier? Answer: Aggregate demands falls

    		•
  • Q : Fiscal measures to accurate

    Describe the fiscal measures to accurate the condition of deficient demand and excess demand. Answer: Fiscal measures are the government’s budgetary policy th

    		•
  • Q : Fiscal and monetary policies in

    Explain the impact of changes in fiscal and monetary policies in curtailing inflation?

    		•
  • Q : Define Depreciation Depreciation of a

    Depreciation of a currency signifies fall in value of domestic currency in terms of foreign currency. Illustration: When value of rupee in terms of US dollars falls, state from Rs. 45 to Rs. 50 per dollar, it will be a condition of depreciation of Ind

    		•
  • Q : Normative goals of macroeconomic

    Commonly agreed-upon normative goals of macroeconomic policy do not include: (w) high employment. (x) price-level stability. (y) redistributing wealth through the rich to the poor. (z) economic growth. Can someone

    		•
  • Q : Open-Economy Macroeconomics

    Open-Economy Macroeconomics   Suppose the structure of an economy with a flexible exchange rates is represented by:   C = 200 + 0.85*(Y - T)             &n

    		•
  • Q : Expanding consumption of a good I have

    I have a problem in economics on Expanding consumption of a good. Please help me in the following question. Your consumption of a good tends to expand if it’s: (i) Relative marginal utility surpasses its relative price. (ii) Total utility is les

    		•
  • Q : The Fed can control the Fed funds rate

    Question: Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have o

    		•
  • Q : Define voluntary unemployment Voluntary

    Voluntary unemployment: It refers to a condition when person are not willing to do work at customary market wage rate, though they are receiving a work.

    		•
  • Q : Formula for Fiscal deficit Fiscal

    Fiscal deficit: Fiscal deficit is stated as the surplus of total expenditure over total receipts, apart from borrowings. Fiscal deficit = Total expenditure (Rev. Exp. + Cap. Exp.) – Total Receipts