Final Exam Part II

NAME: _________________________________

1. Answer the Following Questions Based on the Table Below:

Price level	Real GDP demanded (billions of 2000 dollars)	Real GDP supplied (billions of 2000 dollars)
90	450	150
100	400	250
110	350	350
120	300	450
130	250	550
140	200	600

The table above shows Econland's economy aggregate demand and aggregate supply schedules. Econland's potential GDP is $450 billion.

(1). Graph the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), and the long-run aggregate supply curve (LRAS). Make sure to have price level on vertical axis and real GDP on horizontal axis. Otherwise, no credit is given. (5 pts)

(2). What are the short-run equilibrium price level and real GDPin Econland? (2 pts)

(3). What is the long-run equilibrium real GDP?(hint: it is the same as the potential GDP) (2 pts)

(4). Does Econland have an inflationary gap or a recessionary gap? (2pts)

(5). What is the size of the gap? (1 pt)

(6). What specific fiscal policy would you prescribe to close the gap? (2 pts)

(7). What specific monetary policy would you prescribe to close the gap? (2 pts)

2. If the CPI this year is 110 and was 100in last year,what is the annual inflation rate between last year and this year? Show your calculation. Use your calculator to check your answer. (3 pts)

3. The nominal GDP for 2024is $125billion, and the real GDP for 2024 is $100billion.

(1). Calculate the GDP Deflator in 2024? Show your calculation. (3 pts)

(2). Also assume that the GDP deflator in 2023 was 100. What is the inflation rate over the 1-year period? Show your calculation. (3 pts)

BONUS QUESTION: (5 pts)

WHAT IS THE U.S. UNEMPLOYMENT RATE FOR April 2024?

YOUR ANSWER: ___________%_.