SUMMARY OUTPUT Okun`s law states that the higher the prices, the lower the unemployment

there is a very small correspondence between the values in x and y, or the

Regression Statistics
Multiple R 0.34623426
R Square 0.11987816
Adjusted R S 0.08467329
Standard Erro0.41633063
Observations 27

ANOVA
df SS MS F Significance F
Regression 1 0.59022011 0.59022011 3.40515809 0.07687057
Residual 25 4.33327982 0.17333119
Total 26 4.92349993

CoefficientsStandard Error t Stat P-value Lower 95% Upper 95% Lower 95.0%
Intercept -0.0700184 0.33628817 -0.2082094 0.83675245 -0.7626168 0.6225801 -0.7626168
X Variable 1 0.08839894 0.04790473 1.84530705 0.07687057 -0.0102627 0.18706059 -0.0102627
ces, the lower the unemployment rate, however in this regression analysis we can see that in the UK this is not a very good measurement f
ween the values in x and y, or the inflation and unemployment in this case, to the point in which they are almost unrelated (in this case).

Upper 95.0%
0.6225801
0.18706059
s not a very good measurement for unemployment, as the R Square is closer to 0 than to one. Meaning
almost unrelated (in this case).
SUMMARY OUTPUT
As we can see the value of the R square being closer to 0 we can interpret
Regression Statistics
Multiple R 0.42143272
R Square 0.17760554
Adjusted R S 0.14470976
Standard Erro0.43639226
Observations 27

ANOVA
df SS MS F Significance F
Regression 1 1.02818295 1.02818295 5.39903732 0.02857233
Residual 25 4.76095501 0.1904382
Total 26 5.78913796

CoefficientsStandard Error t Stat P-value Lower 95% Upper 95% Lower 95.0%
Intercept 1.30150948 0.3600575 3.61472673 0.00132271 0.55995717 2.04306179 0.55995717
X Variable 1 -0.0062819 0.00270354 -2.3235829 0.02857233 -0.01185 -0.0007139 -0.01185
being closer to 0 we can interpret that most of the values of y are explained by the values of x a large financial sector will not necessarily m

Upper 95.0%
2.04306179
-0.0007139
ncial sector will not necessarily mean that there is greater GDP, as financial institutions do not generate tangilble output that can be used fo
ngilble output that can be used for the production of goods or services.
Table 1. Key economic indicators for the United Kingdom and Northern Ireland (also called the
Source: FRED

Real GDP
Lending Inflation Unemploymen Consumption
Year Growth
Rate (%) (%) t Rate (%) ($)
(%)

1970 14.08 2.01 3.75 0.90 8,434,000,000

1971 14.08 2.05 4.14 0.83 9,487,750,000

1972 14.64 1.90 4.34 1.15 10,810,500,000

1973 15.52 2.19 3.65 0.93 12,487,000,000

1974 17.92 3.83 3.65 -0.52 14,607,000,000

1975 16.88 5.53 4.50 -0.20 17,993,250,000

1976 17.28 3.03 5.40 1.20 21,093,750,000

1977 16.64 3.43 5.59 0.44 24,198,000,000

1978 16.48 2.20 5.51 1.09 27,984,750,000

1979 18.56 3.88 5.38 0.72 33,329,000,000
1980 21.76 3.73 6.81 -1.04 39,027,500,000
1981 19.36 2.66 9.65 0.32 44,015,250,000
1982 20.16 1.38 10.72 0.56 48,641,000,000
1983 18.40 1.27 11.47 1.16 53,727,750,000
1984 20.64 1.36 11.77 0.61 57,998,000,000
1985 23.68 1.53 11.36 0.83 63,514,000,000
1986 22.00 1.12 11.32 1.03 70,144,750,000
1987 20.71 1.16 10.43 1.49 77,090,250,000
1988 20.65 1.78 8.57 1.21 86,855,250,000
1989 24.43 1.88 7.22 0.32 95,139,250,000
1990 26.55 2.44 7.10 -0.05 ###
1991 25.72 1.02 8.82 -0.13 110,417,500,000
1992 23.55 0.88 9.95 0.30 115,846,000,000
1993 19.72 0.39 10.37 0.68 ###
1994 17.63 0.62 9.50 1.01 ###
1995 17.24 0.75 8.62 0.54 ###
1996 14.55 0.60 8.10 0.57 ###
1997 13.77 0.47 6.97 1.00 ###
1998 13.64 0.28 6.26 0.72 ###
1999 12.62 0.10 5.98 0.99 ###
2000 11.65 0.07 5.46 0.55 ###
2001 11.91 0.30 5.10 0.77 ###
2002 11.17 0.41 5.19 0.70 ###
2003 8.75 0.26 5.01 0.89 ###
2004 7.77 0.27 4.75 0.46 ###
2005 7.79 0.41 4.83 1.03 ###
2006 7.20 0.48 5.42 0.27 ###
2007 7.47 0.44 5.33 0.82 ###
2008 8.70 0.49 5.69 -1.11 ###
2009 10.00 0.39 7.61 -0.35 ###
2010 9.55 0.53 7.87 0.56 ###
2011 8.84 0.70 8.11 0.33 ###
2012 7.76 0.55 7.97 0.32 ###
2013 6.38 0.41 7.61 0.60 ###
2014 5.19 0.36 6.18 0.86 ###
2015 4.40 0.33 5.38 0.42 ###
2016 4.12 0.44 4.90 0.48 ###
orthern Ireland (also called the

Financial depth (%)

18.57

19.45

23.42

29.03

32.89

29.45

25.66
25.33

24.10
23.91
24.69
27.42
31.37
34.12
38.43
41.63
58.89
 76.53
82.68
92.91
100.49
101.93
100.47
98.55
97.53
93.22
96.45
99.32
100.42
102.40
107.49
116.35
120.46
123.99
130.51
136.92
144.98
158.27
180.60
196.13
187.62
177.85
165.47
154.50
141.32
132.98
130.48
 Exam 1
Principles of Macroeconomics

Please answer questions 1, 2 and 3 in this Excel File. Answer questions 4, 5, 6, 7 and 8 in a Word
File. Send both files, the Excel and Word documents, to jstanziola@fsu.edu and
stanziolaj@gmail.com no later than 6 pm today 14th March. Exams received after 6.00 pm will
not be graded. MAKE SURE BOTH FILES HAVE YOUR NAME ON THEM IN THE TITLES OF THE
DOCUMENTS and in the DOCUMENTS!!!

1) Based on figures from Table 1, is there evidence to support Okun´s law in the United Kingdom and
Northern Ireland from 1990 to 2016? Please make sure you conduct a regression analysis to support
your answer. Remember to interpret the two key statistics and the coefficient.
2) Based on figures from Table 1, is there evidence to support the Phillips Curve in the UK from 1990 to
2016? Please make sure you illustrate this relationship with a scatterplot and add a trendline.

3) The value of everything argues that financial depth does not necessarily lead to economic growth.
Using Table 1, is there any evidence that financial depth had an impact on Real GDP growth in the
United Kingdom between 1990 to 2016? Make sure you conduct a regression analysis to support your
answer. Remember to interpret the two key statistics and the coefficient.

4) Let´s say that in 1980 the UK was experiencing a recession. Which fiscal policy tool would you have
used to help the UK get out of this recession. Explain your answer and illustrate the effect of the policy
using an Aggregate Demand and Output graph.
5) Assuming country X has a Central Bank, draw a supply and demand graph to illustrate the money
market for this country. What would be the likely impact on the Money Market and on Aggregate
Demand if the Central Bank sells government bonds to comercial banks? Illustrate your answer.

6) What is the difference between value creation and value extraction? According to The Value of
Everything, does the financial sector create or extract value? Explain your answer.
7) In the Circular flow model, why are imports considered to be a leakage?
8) If the MPC for Country Y is around 0.22, what is the multiplier? Do imports and taxes increase or
decrease an economy´s multiplier? Why?

Philips curve scatter plot

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2.50

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1.50
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1.00

0.50

0.00
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