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Explain okun law

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Suppose that the natural rate of unemployment in a particular year is 4 percent and the actual rate of unemployment is 13 percent.

Use Okun's law to determine the size of the GDP gap in percentage-point terms. If the potential GDP is $500 billion in that year, how much output is being forgone because of cyclical unemployment?

GDP gap = %

Forgone output = $ billion

Reference no: EM13177718

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