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Suppose the economy has a natural rate of unemployment of 6%

a) Suppose short-run output over the next 4 years is +1%, 0%, -1%, and -2%. According to Okun's law, what unemployment rates would we wxpect to see in this economy?

b) Consider another economy in which the unemployment rate over the next 3 years is 6%, 7%, and then 4%. According to Okun's law, what are the levels of short-run output Y in this economy?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91720524

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