What formulas used to get the actual rate of employment?

Anonymous
timer Asked: Aug 11th, 2014
account_balance_wallet $5

Question Description

 25.    Assume the natural rate of unemployment is 5 percent.  What is the actual rate of unemployment if output is 4 percent below potential? 

Answer: 7%

Tutor Answer

madhavant
School: Cornell University

 2 (unemployment\ rate\ -\ natural\ unemployment) = \frac{potential\ GDP - actual\ GDP}{potential\ GDP} \times 100%

(Actual rate of unemployment -Natural rate of Unemployment ) = 2

(Actual rate of unemployment -5) = 2

Actual rate of unemployment =5+2=7

Ref:

http://wiki.ubc.ca/Okun's_Law



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Anonymous
Thanks, good work

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