Determine the change in unemployment - okun''s law, Microeconomics

1. Utilize Okun's law to answer the questions below;

ut - ut-1 = -0.4(gyt - 3%) Assuming ut-1 = 7%

a. Calculate the change in u (ut - ut-1) for each of the following values of gyt: 5%, 7%, 9%. How much has output growth increased? What happens to the change in unemployment due to this increase?

b. Calculate the change in u (ut - ut-1) for each of the following values of gyt: 2.5%, 1.5% and 0. How much has output growth decreased? What happens to the change in unemployment due to this increase?

c. Calculate the change in u (ut - ut-1) when gyt is 3%. What must the growth rate of output be to keep ut from changing?

Posted Date: 3/19/2013 3:54:13 AM | Location : United States







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