UNIT 2: GDP gap, OKUNS law and Rule of 70.

                                                                 GDP Gap

It is the amount by which actual GDP fall short of potential GDP.

                                             OKUNS law

for every one percent in which the actual unemployment rate exceeds the NRU (natural rate of unemployment) a GDP gap of about 2% occurs.
     for example- in 2012, the unemployment rate for mexico was 7.4%, the NRU for mexico is 6%.
                     7.4 - 6 = 1.4 * 2 = 2.8
2.8 potential loss in GDP.

                                                 Rule of 70

     It is used to determine how many years it takes for a value to double, given a particular annual growth rate.
   for example if you put 20,000 dollars in a bank and it earns a yearly interest of 7% how many years will it take for your income to double?
                                      70/7 = 10