Okun's Law equation, y = a + bx + e, reflects the relationship between a country'sgrowth rate (y) and unemployment rate change (x). The regression uses quarterlyseasonally-adjusted data covering a 10-year period to estimate the Okun's Lawequation coefficients, a and b. The regression results suggestRegression StatisticsMultiple RR SquareAdjusted R SquareStandard ErrorObservationsANOVARegressionResidualTotal.0.5816500240.3383177970.3265020442626981009df100SS1197 595615599386.4576539100 584.0532695Coefficients Standard ErrorIntercept0.301072098 0.345330555UnRateChange -5.665498514 1:058781687MS197.59561556.901029535t Stat0.871837414-5.350960053F28.63277349P-value0.3870197081.68197E-06Significance F168197E-06 a) a 1% increase of the unemployment rate change leads to a 5.67% decrease ofthe real GDP growth rate.b) a 1% increase of the unemployment rate change leads to a 1.68% decreaseof the real GDP growth rate.c) the relationship is not significantly different from zero.d) a 1% increase of the real GDP growth rate leads to a 1.68% increase of theunemployment rate change.O e) a 1% increase of the real GDP growth rate leads to a 5.67% decrease of theunemployment rate change.A

The functional form of Okun's law n regression equation y=a+bx+e Where x denotes unemployment rate…

a) a 1% increase of the unemployment rate change leads to a 5.67% decrease of the real GDP growth rate. b) a 1% increase of the unemployment rate change leads to a 1.68% decrease of the real GDP growth rate. c) the relationship is not significantly different from zero. d) a 1% increase of the real GDP growth rate leads to a 1.68% increase of the unemployment rate change. e) a 1% increase of the real GDP growth rate leads to a 5.67% decrease of the unemployment rate change.

a) a 1% increase of the unemployment rate change leads to a 5.67% decrease of the real GDP growth rate. b) a 1% increase of the unemployment rate change leads to a 1.68% decrease of the real GDP growth rate. c) the relationship is not significantly different from zero. d) a 1% increase of the real GDP growth rate leads to a 1.68% increase of the unemployment rate change. e) a 1% increase of the real GDP growth rate leads to a 5.67% decrease of the unemployment rate change.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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