GDP GAP

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

Okun's Law

- It states for every 1% that actual employment rate exceeds the natural rate of unemployment (NRU), a GDP gap of 2% occurs.
- Example: In mexico, the unemployment rate is 7.4%, the natural of employment is 6%. 2(7.4 - 6) =     2.8%.

Rule of 70

- It is used to determine how many years it take for a value to double given a particular annual growth   rate.
- Example: If you put $20,000 in the bank and it earns a yearly interest rate of 7%, then how many years will it take for your income to double.
- Formula: (70/ # of years).