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Relation between Unemployment and GDP
3
Transcript
Is there a relation between Unemployment and GDP ?
Unemployment rate:
- 2005-> ~8.2%
- 2006-> ~5.6%
Thank you for your attention
Source :
Unemployment
~7.8%
- http://www.indexmundi.com/lithuania
- http://www.indexmundi.com/germany/unemployment_rate.html
- http://countryeconomy.com/gdp/lithuania
- http://countryeconomy.com/gdp/germany
- http://countryeconomy.com/gdp/ukraine
- http://www.investopedia.com/articles/economics/12/okuns-law.asp
- http://www.sparknotes.com/economics/macro/measuring2/section2.rhtml
- http://en.wikipedia.org/wiki/Okun's_law
Made by Žygimantas Jurgelevičius
Calculations by formula :
% change in GDP = 3% - 2 x (change in unemployment rate)
- 5.6%-8.2%= -2.6%
- 3% - 2 * (-2.6%) = 8.2%.
We obtain that in 2006 should GDP increase to 8.2%
Okun's Law
Gross Domestic Product
Know as:
- GDP
- National Output
- Measure of the Economy's Health
- An economist named Arthur Okun looked at the relationship between unemployment and national output over the past 50 years.
- His research on the subject has known as Okun's Law.
GDP (Y) is the sum of :
Formula of Okun's Law:
- Consumption (C)
- Investment (I)
- Government Spending (G)
- Net Export (X-M)
% change in GDP = 3% - 2 x (change in unemployment rate)
Formula:
Y = C + I + G + (X-M)
Tasks :
Unemployment
- Remind what is Gross Domestic Product.
- Definition of Unemployment
- Okun's law, what it is ?
- Consider several calculation examples.
- See if "Okun's Law" method is always right.
- Situation where someone of working age is not able to get a job but would like to be in full time employment.
People not in the labor force are:
- Those who younger than 16
- Active duty military
- Active Student
- Retired
Gross Domestic Product
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