econ101 hw1 - Allison Cox 8698037 Econ 101 Professor Morgan...

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Allison Cox # 8698037 Econ 101 Professor Morgan Homework #1 Chapter 1 3. Natural real GDP and natural real unemployment relate to the rate of inflation by providing a constant level of real GDP and unemployment without inflation. When one compares both with actual and natural GDP and unemployment with see the effect that inflation has on both. They give the optimum condition of no inflation as if it was not a factor in the economy. 6a. In the short run the components that are used to evaluate the behavior of the economy are unemployment and inflation rates, essentially minimize fluctuation in GDP. In the long run the component that is used to evaluate the behavior of the economy is production or economic growth. Best situation calls for the economy to be a speed- nation, implying fast growth in real GDP. 9. When the value of real GDP is compared to natural real GDP we can see he effects of inflation and what could be happening to production and unemployment. Depending on
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