Question

Actual rate of unemployment is 10%, natural rate of unemployment is 6%. Actual GDP is 1120 billion rub., Okun’s coefficient is 2,5. Calculate the potential GDP.​

Answer 1

Potential GDP = Actual GDP + (Actual Unemployment Rate - Natural Unemployment Rate) * Okun's Coefficient

Potential GDP = 1120 billion rub. + (10% - 6%) * 2.5

Potential GDP = 1140 billion rub.