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How does real GDP affect unemployment rate?

In: Economics, Budgeting and Forecasting, Unemployment [Edit categories]

Answer:

Real GDP is a measure of the economic output of a country. The absolute measure only tells you what that output was for a particular period. The more important measure for employment is the difference between real GDP and a theoretical real GDP which economists use to calculate the maximum output of an economy. When the gap between real GDP and maximum output GDP is large, the unemployment rate will be large and vice versa.

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Bruce

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