When potential real GDP is equal to 70, this economy is in recession . The amount of the shortfall in planned aggregate expendi
ture is equal to A. the amount of actual real GDP. B. the amount of potential real GDP. C. the horizontal distance between potential real GDP and actual real GDP. D. the vertical distance between AE and the 45degrees line at the level of potential real GDP.
1 answer:
Answer: Option (D) is correct.
Explanation:
If the potential GDP is 70 and economy is in recession. Potential GDP is the GDP of an economy which can be achieved with the best utilization of economy's resources.
The amount of the shortfall in planned aggregate expenditure is equal to the vertical distance between the 45 degree line and the AE = Y, at a level of potential real GDP.
This is also shown by an arrow in the diagram.
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Answer:
return of the asset = 13.94%
return of the asset = 13.11%
return of the asset = 11.46 %
Explanation:
given data
average return = 14.60 percent
geometric average return = 10.64 percent
observation period = 25 years
solution
we get here return of the asset over year by Blume formula that is
return of the asset = ( T- 1 ) ÷ ( N - 1) × geometric average + ( N -T) ÷ ( N - 1) × arithmetic average ..................1
here N is observation period and T is time
put value in equation 1
return of the asset =
return of the asset = 0.1394 = 13.94%
and
return of the assets =
return of the asset = 0.13115 = 13.11%
and
return of the assets =
return of the asset = 0.11465 = 11.46 %