The following graph shows the relationship between real GDP growth and change inunemployment for the US between 1961 and 2013.US (1961-2013)Change in unemployment rate (%)6462009-1 0y=-0.3768x+1.2298R=0.6414Real GDP growth (%)The equation shown is the regression result for the best-fitting line. Based on thisinformation, which of the following statements is correct?9a) With real GDP falling by 2.8% in 2009, the predicted rise in theunemployment rate would have been 2.3%b)From the regression result, policy makers can be sure that a 1 percentagepoint increase in real GDP next year will definitely lead to a fall in theunemployment rate of 0.38%.Oc) The unemployment rate remains stable when there is zero real GDP growth.d) Okun's coefficient for the US is 1.2298

We have been provided with a graph that depicts the relationship between real GDP growth and the…

Answered: The equation shown is the regression…

The equation shown is the regression result for the best-fitting line. Based on this information, which of the following statements is correct?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following graph shows the relationship between real GDP growth and change in
unemployment for the US between 1961 and 2013.
US (1961-2013)
Change in unemployment rate (%)
6
4
6
2009
-1 0
y=-0.3768x+1.2298
R=0.641
4
Real GDP growth (%)
The equation shown is the regression result for the best-fitting line. Based on this
information, which of the following statements is correct?
9
a) With real GDP falling by 2.8% in 2009, the predicted rise in the
unemployment rate would have been 2.3%
b)
From the regression result, policy makers can be sure that a 1 percentage
point increase in real GDP next year will definitely lead to a fall in the
unemployment rate of 0.38%.
Oc) The unemployment rate remains stable when there is zero real GDP growth.
d) Okun's coefficient for the US is 1.2298

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