search

# 3 Using Okuns law, fill in the four pieces of missing data in the f

Content type
User Generated
Rating
Showing Page:
1/2
3. Using Okun?s law, fill in the four pieces of missing data
in the following table. That is, replace (1), (2), (3) , and (4)
with correct data. LO3
Solution
1) In 2009:
Y = 7840 / Y* = 8,000. Y*-Y = 160.
In (%) = (8000-7840)/8000=2%
That means, in 2001 real GDP is 2% below potential GDP,
so cyclical unemployment is 1%.
Since the actual unemployment rate (U) is 6%, the natural
rate (U*) must be 5%
2) In 2010:
The natural rate (U*) equals the actual rate (U), so cyclical
unemployment equals zero and there is no output gap.
Thus potential output equals 8100, the same as actual real
GDP.
3) In 2011:
Cyclical unemployment equals U-U* =4% - 4.5% = -0.5%
By Okun

Sign up to view the full document!

Showing Page:
2/2

Sign up to view the full document!

Unformatted Attachment Preview
3. Using Okun?s law, fill in the four pieces of missing data in the following table. That is, replace (1), (2), (3) , and (4) with correct data. LO3 Solution 1) In 2009: Y = 7840 / Y* = 8,000. Y*-Y = 160. In (%) = (8000-7840)/8000=2% That means, in 2001 real GDP is 2% below potential GDP, so cyclical unemployment is 1%. Since the actual unemployment rate (U) is 6%, the natural rate (U*) must be 5% 2) In 2010: The natural rate (U*) equals the actual rate (U), so cyclical unemployment equals zero and there is no output gap. Thus potential output equals 8100, the same as actual real GDP. 3) In ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

### Review

Anonymous
Really helped me to better understand my coursework. Super recommended.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4