Question 32(3 points)

The following figure depicts the economy of Atlas, which is presently in equilibrium.

a) What is the size of its recessionary gap?

b) What is the size of its gap as a percentage of its actual GDP?

c) If the natural rate of unemployment is 5 percent, using Okun's Law, calculate the amount of unemployment in Atlas.

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Question 33(3 points)

Assume that the economy is at full employment. Now suppose there is an increase in consumption. At the new equilibrium,

a) will there be an output gap? What type?

b) what is the effect on the price level?

c) what is the effect on the level of Real GDP

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Question 34(3 points)

Assume that the economy is at full employment. Now suppose there is an increase in the size of the labour force. At the new equilibrium,

a) Will there be an output gap? What type?

b) What is the effect on the price level?

c) What is the effect on the level of Real GDP?

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Question 35(2 points)

Assume that the nominal wage rate increases from $16.50 to $18.40 and, at the same time, the price index increases from 110 to 115. By how much has the real wage rate changed?

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Question 36(3 points)

In Altus, income rose by $80 billion over the past year. During the same period, its aggregate expenditures increased by $55. What are the values of its MPE, MLR and multiplier?

Question 36 options: