If the natural rate of unemployment is 5.0 percent, the current unemployment rate is 7.3 percent, and the current GDP is 6 billion, according to Okun's law, the economy's potential output (in billion dollars, rounded to two decimal points) is:
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- In Okunland, a country whose economy operates according to Okun's law, real GDP equals $7,520 billion, potential GDP equals $8,000 billion, and the actual unemployment rate is 8 percent. What is the natural rate of unemployment in Okunland? Multiple Choice 11 percent 2 percent 5 percent 6 percentAccording to Okun’s Law, how much must U.S. real GDP grow in 1 year in order for the U.S. unemployment rate to decline by 1.5 percentage points in 1 year? According to Okun’s Law, how much must U.S. real GDP grow in 1 year in order for the U.S. unemployment rate to decline by 1.5 percentage points in 1 year? 6% 7% 5% 4%The version of Okun's law discussed in class implies that with no change in unemployment, real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's law predicts that real GDP would: a. decreased by 4 percent b. decrease by 2 percent c. increase by 1 percent d. decrease by 1 percent
- Using the information below, answer questions 1 & 2 Okun’s Law, which describes the relationship between Real GDP growth and the change in the unemployment rate and may be approximated as follows: Real GDP Growth = 3 – 2*Change in unemployment rate This relationship applies to changes from year to year. The average unemployment rate in the 12 months of 2019 was 3.7%. The average unemployment rate during the 12 months of 2020 was 5.9%. 1. What does Okun’s Law imply will be the rate of Real GDP growth between 2019 and 2020? Explain your answer. 2. How does this prediction compare to the actual rate of Real GDP growth between 2019 and 2020?Assume that in a country, the total labour force is 150,000 workers, and the total numbers of workers employed is 145,500. What is the unemployment rate in the economy?Macropoland, a country that is a natural gas and oil importer, has a natural rate of unemployment (at the full employment level of GDP) that is about 4.5%, and the long run average rate of inflation over time has been about 2%. However, during the period 1973-1974, the country experienced an inflation rate of about 15% while simultaneously experiencing unemployment of nearly 13%.At the present time, Macropoland is experiencing very sluggish consumption and investment (a result of a fall in the housing market), and unemployment has again edged up to around 9%. Inflation is very low at 0.4%.Macropoland has just hired you as their economic advisor. You have a big job ahead of you. Using your knowledge of aggregate demand and aggregate supply, can you explain what happened in these two time periods?Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical…
- Why is the unemployment rate considered to by some to be an incomplete measure of economic hardship and lost output? What alternative measure is provided by the Bureau of Labor Statistics to measure lost economic productivity?For a country, economists have estimated that structural unemployment is 2.0% and frictional unemployment is 3.0%. If total unemployment is currently 4.0%, this suggests that:Which of the following statements regarding policy measures to reduce unemployment is/are correct? a) Additional employment opportunities can be created by increasing automated production of goods and services. b) Consumption and investment must be lowered by increasing taxes or interest rates. c) The population growth rate must be lowered.
- Suppose the Farsighted Forecasting Group, an organization of private economists, predicts that the output gap will fall by 4 percent over the next year. According to Okun’s Law, by how much is the unemployment rate likely to rise?Suppose a small island nation, called Econland, has a population of 100,000 people. The labor force consists of 60,000 people, out of which 55,000 are employed and 5,000 are unemployed. Calculate the following economic indicators for Econland: Unemployment Rate Labor Force Participation RateEmployment Rate Population Growth Rate (Assuming the previous year's population was 95,000): Round your answers to the nearest two decimal places.If the unemployment rate is approximately 6.1% then it must be true that there is Unemployed = 5 million persons & Employed = 150 million persons Unemployed = 10 million persons & Employed = 155 million persons Unemployed = 2.5 million persons & Employed = 75 million persons Unemployed = 15 million persons & Employed = 175 million persons
