Flashcards
L18 - Potential Output
Cards in this deck (5)
- 1At potential output, what happens to unemployment?Y = Y* --> u = u* --> cyclical unemployment = 0
- 2At RealGDP, what happens to unemployment?Y < Y* resulting in a recessionary gap --> u > u* --> cyclical unemployment is (+)
- 3What happens to unemployment when the economy is producing more than potential?Y > Y* resulting in an expansionary gap --> u < u* --> cyclical unemployment is (-)
- 4What is u*?The estimate of what u will be.
- 5What are changes in realGDP inversely related to?Changes in the unemployment rate.
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- ECON112
- Created by
- Sophia Lynch · Sep 2020
- Updated
- Sep 9, 2020
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