Describe the potential output.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 3RQ

To determine

Describe the potential output.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Recent data from the Bureau of Labor Statistics show that the average price level for consumers rose 5.4% over the past year. While some are expressing concern over rising inflation leading the economy to “overheat,” there is some evidence indicating that this is due to the reopening of the economy as producers adjust to rising demand for goods and services. Many of the goods with the largest price increases, like bacon or cars and trucks, cannot have their production ramped up as quickly as demand is increasing. Other industries are facing supply chain challenges, like shortages of truck drivers. These problems are most likely to be short term, so, as supply catches up with demand, we can expect to see prices return to normal. As evidence, after spiking to record highs in early summer, lumber prices have now fallen below their price at the start of the year. The reason for the dramatic price increase earlier in the year was a combination of reduced supply in 2019 and a surge in demand…

In a hypothetical economy, coal is sold to electricity producers at a rate of 100 cents per kW (i.e. the amount of electricity the coal can produce). Electricity is produced by power producers and sold to distributors at a rate of 150 cents per kW. These distributors then well the electricity to final consumers at a rate of 200 cents per kW. There were 50 million kW were produced in 2021. Assuming no other good was produced in this economy it can be concluded in 2021 that: a) The GDP in this economy according to the production method is R 50 million b) The GDP in this economy according to the expenditure method is R 200 million c) The GDP in this economy according to the value added method is R 50 million d) The GDP in this economy according to the value added method is R 100 million

After staying virtually flat for about a year and a half, the average lending rate of banks has started to show signs of decline in April after the Bank of Ghana reduced the monetary policy rate the month before. The Summary of Economic and Financial Data (May 2020) published by the Bank of Ghana has shown that average lending rate has finally moved out of its comfort zone to a step downward. Prior to recording 22.38 percent in April, the average lending rate has since the past 17 months (December 2018) not come below 23%.How would banks benefit when interest rates decrease?