7. The accompanying scatter diagram shows the relation-ship between the unemployment rate and the outputgap in the United States from 1996 to 2019. Draw astraight line through the scatter of dots in the figure.Assume that this line represents Okun's law:Unemployment rate=b-(mx Output gap)where b is the vertical intercept and -m is the slope.CUnemploymentrate10%862-6 -5 -4 -3 -2 -1 0Data from: Federal Reserve Bank of St. Louis.AB3%1 2Output gapWhat is the unemployment rate when aggregate outputequals potential output? What would the unemploy-ment rate be if the output gap were 2%? What if theoutput gap were -3%? What do these results tell usabout the coefficient m in Okun's law?

The O's law describes the country's connection between the growth of the economy and the rate of…

. The accompanying scatter diagram shows the relation- ship between the unemployment rate and the output gap in the United States from 1996 to 2019. Draw a straight line through the scatter of dots in the figure. Assume that this line represents Okun's law: Unemployment rate = b-(mx Output gap) where b is the vertical intercept and -m is the slope. -5 C Unemployment rate 10% 8 6 2 A -4 -3 -2 -1 0 1 Data from: Federal Reserve Bank of St. Louis. B 1 2 Output gap 3% What is the unemployment rate when aggregate output equals potential output? What would the unemploy- ment rate be if the output gap were 2%? What if the output gap were -3%? What do these results tell us about the coefficient m in Okun's law?

. The accompanying scatter diagram shows the relation- ship between the unemployment rate and the output gap in the United States from 1996 to 2019. Draw a straight line through the scatter of dots in the figure. Assume that this line represents Okun's law: Unemployment rate = b-(mx Output gap) where b is the vertical intercept and -m is the slope. -5 C Unemployment rate 10% 8 6 2 A -4 -3 -2 -1 0 1 Data from: Federal Reserve Bank of St. Louis. B 1 2 Output gap 3% What is the unemployment rate when aggregate output equals potential output? What would the unemploy- ment rate be if the output gap were 2%? What if the output gap were -3%? What do these results tell us about the coefficient m in Okun's law?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter21: Unemployment

Section: Chapter Questions

Problem 41CTQ: Unemployment rates have been higher in many European countries in recent decades than in the United...

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