Explain why there is a natural unemployment deficit

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Reference no: EM13155674

Assume Yn = 11,600, t=0.2, and G = 2,610

(a) compute the anoutn of taxes at natural treal GDP

(b) Explain why there is a natural unemployment deficit. Compute the amount of the natural employment deficit in terms of both billions of dollars and as a percent of natural real GDP.

(c) suppose the goal of fiscal policy makers is to reduce the size of the natural emloyment deficit to 1 percent of natural real GDp. Compute what the size of teh natural employment deficit must be in terms of billions of dollars in order for fiscal policy makers to achieve their goal.

(d) Given no change in the tax rate, compute by how much fiscal policy makers must cut government spending in order to accomplish their goal.

(e) Given no change in government spending, compute by how much fiscal policy makers must increase the tax rate in order to accomplish their goal.

Reference no: EM13155674

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