Suppose economy has a natural rate of unemployment

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Suppose an economy has a natural rate of unemployment of 5%. According to Okun's law, what rates of unemployment would we expect to see in this economy, if the short-run output equals -2% one year and +2% another year? Explain the differences in results.

Make sure to show your formulas, graphs, or calculations to substantiate your answers.

Reference no: EM131161703

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