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

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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

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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 ...
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