1. Use the accompanying table to answer the following questions.

Year	Real GDP (trillions of $)	Potential Output (trillions of $)
2014	$17.11	$17.38
2015	$17.46	$17.69
2016	$17.78	$17.99
2017	$18.22	$18.29
2018	$18.77	$18.65

a. Calculate the output gap for each year.

b. What does it mean when the output gap is negative? What does it mean when it is positive?

c. For each year, calculate how much the output gap changed. Compare this to the growth rate of actual output that year, less the growth rate of potential output

2. Assuming the equilibrium unemployment rate is 5%, if actual output falls to 5 percentage points below potential output, how would you expect the unemployment rate to change? (Hint: Use Okun's rule of thumb.)

3. What indicators should you use to track each of the following, and why? (Economic Indicators: Real GDP, Real GDI, Nonfarm payrolls, Unemployment rate, Initial unemployment claims, Business confidence, Consumer confidence, Inflation, Employment cost index, The stock market)

a. The overall size of the economy

b. Labor market performance

c. The future trajectory of economic activity

d. Wages and benefits