Given below are data on real GDP and estimates of potential GDP for Canada prepa

Question

Given below are data on real GDP and estimates of potential GDP for Canada prepared by the IMF. For each year, calculate the output gap as a percentage of potential GDP, and state whether the gap is a recessionary gap or an expansionary gap, according to the IMF. Also, calculate the year-to-year growth rates of real GDP.

Instructions: Round your percentage value answers to 1 decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.

Year

Real GDP (2002 $, billions)

Potential GDP (2002 $, billions)

Output gap as a percentage of potential gap

Recessionary or expansionary gap

Growth rate of real GDP

2004

1211

1198

%

(Click to select)expansionaryrecessionaryno output gap

- - -

2005

1248

1230

%

(Click to select)recessionaryno output gapexpansionary

%

2006

1283

1261

%

(Click to select)recessionaryno output gapexpansionary

%

2007

1311

1290

%

(Click to select)no output gaprecessionaryexpansionary

%

2008

1318

1317

%

(Click to select)expansionaryno output gaprecessionary

%

2009

1286

1337

%

(Click to select)no output gaprecessionaryexpansionary

%

Year

Real GDP (2002 $, billions)

Potential GDP (2002 $, billions)

Output gap as a percentage of potential gap

Recessionary or expansionary gap

Growth rate of real GDP

2004

1211

1198

%

(Click to select)expansionaryrecessionaryno output gap

- - -

2005

1248

1230

%

(Click to select)recessionaryno output gapexpansionary

%

2006

1283

1261

%

(Click to select)recessionaryno output gapexpansionary

%

2007

1311

1290

%

(Click to select)no output gaprecessionaryexpansionary

%

2008

1318

1317

%

(Click to select)expansionaryno output gaprecessionary

%

2009

1286

1337

%

(Click to select)no output gaprecessionaryexpansionary

%

2010 1325 1358 % (Click to select)recessionaryexpansionaryno output gap %

Explanation / Answer

output gap as a

percentage of potential GDP

Recessionary or

expansionary gap

Year Real GDP Potential GDP

output gap as a

percentage of potential GDP

Recessionary or

expansionary gap

Growth rate of real GDP 2004 1211 1198 1.085 inflationary gap - 2005 1248 1230 1.46 inflationary gap 3.055 2006 1283 1261 1.74 inflationary gap 3.055 2007 1311 1290 1.63 inflationary gap 2.182 2008 1318 1317 0.076 inflationary gap 0.53 2009 1286 1337 3.81 deflationary gap -2.43 2010 1325 1358 2.43 deflationary gap 3.032

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