# Suppose the unemployment rate is 9%, the natural rate of unemployment is 4.5%, and Okun’s scalar has an absolute value of .015. If potential GDP is $20T, what do you expect the actual GDP to be? (Round to nearest$10B)

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Suppose the unemployment rate is 9%, the natural rate of unemployment is 4.5%, and Okun’s scalar has an absolute value of .015. If potential GDP is $20T, what do you expect the actual GDP to be? (Round to nearest$10B)

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Step 1

Okun’s law measures the relationship between output and unemployment. According to Okun’s law for every 1% increase in unemployment the output gap increases by some percentage point.

Step 2

Mathematically it can be expressed as follows,

Step 3

Given informa...

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