Measuring the Economy 2
|Percentage change in the price level||[CPI(earlier year) - CPI(later year)] / CPI(earlier year) or [GDP(earlier year) - GDP(later year)] / GDP(earlier year)|
|Okun's Law||Percentage change in real GDP = 3% - 2(change in the unemployment rate)|
|Unemployment Rate||Unemployment rate = (unemployed)/(employed + unemployed)|
Inflation = ((expected inflation) - B) ((cyclical unemployment rate) + (error))
where B equals a number greater than zero that represents the sensitivity of inflation to unemployment.