Suppose potential output grows 2 percent per year and the, Ask an Expert

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Suppose potential output grows 2 percent per year and the natural rate of unemployment is constant at 6 percent. In 2020, the unemployment rate is 7 percent.

a. Assuming Okun's law, what is the output gap in 2020?

b. If output grows 5 percent from 2020 to 2021, what is the unemployment rate in 2021?

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Financial Management, Finance

Category:- Financial Management
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