--%>
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 : If the MPC is .70 and investment

    If the MPC is .70 and investment increases by $3 billion, the equilibrium GDP will:

    		•
  • Q : Goals of Microeconomic Hello guys I

    Hello guys I need your advice. Please advise your view for following economics problems. Microeconomic goals consist of: (w) full employment. (x) efficient allotments of resources. (y) price level stability. (z) ec

    		•
  • Q : Paradox of Value-High values of

    The fact that most of the necessities for life like water are priced much lower than the frivolities like diamonds is addressed by the: (1) Utilitarian enigma. (2) Law of diminishing marginal utility. (3) Rational ignorance of hypothesis. (4) Paradox of the value. (5)

    		•
  • 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 : Fundamental supply and demand in foreign

    Question: Changes in currency supply and demand can be traced back to changes in fundamental supply and demand in foreign and domestic i._____________________ markets and foreign and domestic ii.___________________

    		•
  • Q : Sources of demand for foreign currency

    State main sources of demand for foreign currency? Answer: The four main sources of demand for foreign currency are as follows: A) To buy services and goods from other countries. B) To send a gift abroad.

  • Q : Objective of government Budget Give

    Give some objective of government Budget. Answer: The objectives which are pursued by government via the budget are as follows: A) To attain economic growth. B) To decrease in equalities in income and wealth.

    		•
  • Q : If households If households become more

    If households become more willing to hold less cash and more stocks or bonds, the

    		•
  • Q : Discount rate-Prime rate and the

    What is the difference among the discount rate, prime rate and the subprime rates of interest? Which interest rate in particular build the 2008 recession? Explain how that happened.

    		•
  • Q : Assignment Task 1 – Commercial banks in

    Task 1 – Commercial banks in United Economy have total deposits of AED 300 billion. Their reserves are AED 15 billion, two- thirds of which are with the Central Bank as deposits. There are AED 30 billion notes outside the banks. There are no coins! Calculate- a) The monetary base. b) The bank

    		•