Extra Credit.pptx - Extra Credit Problem Set Jack...

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Extra Credit Problem Set Jack Limongelli
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Part A
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Part A Table
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Part B
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Part B Explanation For the most part, Okun’s law accurately predicts the general trends of Real GDP percentage growth: almost perfectly prior to 1990. There are many years where the prediction is either greater or lower by less than about 1%, but there are 2 areas of large trend disagreement: the late 1990’s and the since 2009. From 1996 to 1998, Okun’s rule predicted a GDP growth decrease while real GDP growth was increasing. Similarly, following the 2008 financial crisis, Okun’s law predicted GDP growth to increase from -4% in 2008 to over 4% in 2010 and the years following. However, real GDP growth reached only slightly above 2% and has largely hovered around that mark since, even though Okun’s law currently places it at 4.8%
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Part B Continued -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 ChangeandError Time(years) UnemploymentChangeVsOkun'sLawError Unemployment Change Okun's Law Error
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Part B Continued The previous graph shows the relationship between the
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