Question
Using Okun's Law, calculate the gap between potential output and actual output in a hypothetical economy in 2019 and 2020, writing billions of dollars to
Using Okun's Law, calculate the gap between potential output and actual output in a hypothetical economy in 2019 and 2020, writing billions of dollars to one decimal place e.g. $1.0 billion. In your answers, assume a natural unemployment rate of 5.5%.Enter the answer after rounding off to 1 decimal place.
a. In 2019, the unemployment rate was 5.8% and real GDP in 2017 dollars was $1,553.2 billion. Therefore GDP in 2012 dollars could have been $_____billion higher.
b. In 2020, the unemployment rate was 6.9% and real GDP in 2017 dollars was $1,622.8 billion. Therefore GDP in 2012 dollars could have been $_____billion higher.
Please help. Thank you.
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