Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 3

GDP GAP AND EXPENDITURE GAP The St. Louis Federal Reserve Bank at www.research.stlouisfed.org/fred2 provides data on both real GDP (chained 2000 dollars) and real potential GDP for the United States. Both sets of data are located as links under "Gross Domestic Product and Components." What was potential GDP for the third quarter of 2001 What was the actual level of real GDP for that quarter What was the size difference between the two-the negative GDP gap If the multiplier was 2 in that period, what was the size of the economy's recessionary expenditure gap