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what happens if the GDP falls ?
- The country output will fall so fewer workers are needed and unemployment will occur .
- The average standard of living of people in the country - the number of goods and services they can afford to buy in one year - will decline .Therefore people will become poorer.
- Business owners will not expand their firms as people will have less money to spend on the products they make.
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∙ 11y ago
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What happens going from left to right on the aggregate demand curve real GDP?
rises as price level falls
If real GDP rises while nominal GDP falls then prices on average have?
risen
Can real GDP rise as per-capita real GDP falls?
It can if your population increases faster than your GDP. Imagine if you have a 6% growth in GDP but a 10% growth in population => a reduction of 4% in GDP per capita.
When CPI decreases what happens to real GDP?
it decreases also
If aggregate demand rises what happens to real GDP what happens to the price level?
Inflation.
What happens going from left to right on the aggregate demand curve real GDP?
rises as price level falls
If real GDP rises while nominal GDP falls then prices on average have?
risen
Can real GDP rise as per-capita real GDP falls?
It can if your population increases faster than your GDP. Imagine if you have a 6% growth in GDP but a 10% growth in population => a reduction of 4% in GDP per capita.
When CPI decreases what happens to real GDP?
it decreases also
If aggregate demand rises what happens to real GDP what happens to the price level?
Inflation.
Going left to right on the aggregate demand curve real GDP?
rises as price level falls
Going from left to right on the aggregate demand curve real GDP .?
rises as price level falls
Define potential GDP under what circumstances does actual real GDP fall short of potential GDP equal potential GDPand exceed potential GDP?
Potential GDP is basically the sum of growth in productivity, growth in labor force, and growth in number of hours worked. In a mature economy like the US, change in number of hours worked is insignificant and often ignored. -Potential GDP is the level of real GDP that the economy would produce if it were at full employment. When real GDP falls short of potential GDP the economy is not at full employment. When the economy is at full employment real GDP equals potential GDP. Real GDP can exceed potential GDP only temporarily as it approaches and then recedes from a business cycle peak.
How can nominal GDP increase even though real GDP falls?
Primarily this happens because of increase in prices. Nominal GDP= GDP using current prices. Real GDP= GDP that takes prices changes into account. Let me give a very simple example, let's say: In year 1, the country produced 10 computers for 10 dollars each. So GDP for year 1= $100 In year 2, the country only produced 9 computers for 15 dollars each. So GDP for year 2 = $135 (9x15) In year 2,the nominal GDP has increased from $100 to $135. However, we measure real GDP using a base year, in this case year 1, so we use the price of year 1 to find the real GDP for year 2. Using prices of year 1 we have: 9 computers x $10 each = $90 of real GDP. Finally, you see that even nominal GDP for year 2 was $135, the real GDP was $90.
Nominal GDP differs from real GDP because?
Real GDP is adjusted for changes in the price level.
Explain real GDP vs potential GDP?
Potential GDP is the total numerical value of GDP before inflation is counted in. Real GDP is nominal GDP adjusted for inflation
A headline states real GDP falls again as the economy slumps This condition is most likely to produce what type of unemployment?
cyclical
