Suppose that during 2005, the actual real GDP of Chile was 3.5 ...

[arivle123]

Suppose that during 2005, the actual real GDP of Chile was 3.5 billion pesos at the same time the potential GDP was 3.4 billion pesos. What sort of equilibrium existed in Chile?
 
  What will be an ideal response?

Question 2

How can managers of natural monopolies exaggerate their costs?
 
  What will be an ideal response?

[yuyiding]

Answer to Question 1

Chile's actual real GDP exceeded its potential GDP, so Chile was in an above full-employment equilibrium with an inflationary ga

Answer to Question 2

By increasing on-the-job luxury items such as sumptuous office suites, limousines, golf competitions at expensive locations, company jets, and other non-necessary expenditures, the managers can exaggerate their costs over what is truly necessary to produce the product.