Author Question: What does the GDP gap measure?[br][br][b][color=#165FFA]Question 2[/color][/b][br][br]Unemployment ... (Read 26 times)

jhjkgdfhk · **on:** Jun 30, 2018

What does the GDP gap measure?

Question 2

Unemployment insurance payments act as automatic stabilizers by:
a. allowing for more consumer spending during prosperity.
b. making the unemployment rate worse during a recession.
c. allowing for more consumer spending during a recession.
d. changing the Phillips curve to a Laffer curve.

nekcihc358 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The GDP gap = potential real GDP actual real GDP. It measures the loss of potential output associated with unemployment which can never be realized (it measures the economic cost of unemployment).

Answer to Question 2

b