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Suppose the economy has a natural rate of unemployment of 5%.
a. Suppose short-run output over the next four years is +1%, 0%, -1%, and -2%. According to Okun's law, what unemployment rates would we expect to see in this economy?
b. Consider another economy in which the unemployment rate over the next three years is 6%, 7%, and then 4%. According to Okun's Law, what are the levels of short run output (Y tilde) in this economy?
Please refer to Citizen Gas Company PDF for case study and questions. The case study belongs to Economics. Citizen Gas Company is a medium sized company with customers from residential, commercial and industrial sectors.
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