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Homework answers / question archive / Year Consider the data of the following table for the years 2015 and 2016 Real GDP Potential GDP Unemployment rate 4
Year Consider the data of the following table for the years 2015 and 2016 Real GDP Potential GDP Unemployment rate 4.26 trillion $ 4.19 trillion $ 3.5 % 4.27 trillion $ 4.34 trillion $ 4.9% 2015 2016 a. In 2015, Real GDP is higher than potential GDP. Explain how is this possible b. Real GDP is 2016 is higher than 1969, the unemployment rate increased substantially from 2015 to 2016. Why did this increase in unemployment occur? c. Was the inflation rate in 2016 to have been higher or lower than the inflation rate in 2015? Does your answer depend on whether the recession that started in December 2015 was caused by a supply shock or by a change in a component of aggregate demand?
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