Refer to the following table. What was the approximate output gap in 1999?
$$\begin{array} { | c | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Real GDP } \
\text { (trillions of \$) }
\end{array} & \begin{array} { c }
\text { Potential GDP } \
\text { (trillions of \$) }
\end{array} \
\hline 1995 & 3.20 & 3.30 \
\hline 1996 & 3.45 & 3.65 \
\hline 1997 & 3.75 & 3.89 \
\hline 1998 & 4.05 & 4.10 \
\hline 1999 & 4.38 & 4.30 \
\hline
\end{array}$$

Question

Refer to the following table. What was the approximate output gap in 1999?
$$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Real GDP } \
\text { (trillions of \$) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (trillions of \$) }
\end{array} \
\hline 1995 & 3.20 & 3.30 \
\hline 1996 & 3.45 & 3.65 \
\hline 1997 & 3.75 & 3.89 \
\hline 1998 & 4.05 & 4.10 \
\hline 1999 & 4.38 & 4.30 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The output gap is calculated as the difference between real GDP and potential GDP as a percentage of potential GDP. For 1999, the real GDP is 4.38 trillion and the potential GDP is 4.30 trillion. The output gap is $\frac{4.38 - 4.30}{4.30} \times 100 = \frac{0.08}{4.30} \times 100 \approx 1.9\%$.

Refer to the Following Table A)19% B)1

Refer to the Following Table A)19%
B)1