9. You are given the following data on the unemployment rate and output in France. a. Assume...
Question:
9. You are given the following data on the unemployment rate and output in France.
a. Assume that the natural rate of unemployment is 8% and that (Y - Y)>Y = 2(u - u). Find the fullemployment level of output in each year.
b. Calculate the growth rate of full-employment output in years 2, 3, and 4 in two different ways. First, calculate the growth rates by using the values for full-employment output that you found in part (a).
Then calculate the growth rate of full-employment output by using only the change in the unemployment rate, the growth rate of output, and the growth rate version of Okun’s law, !Y>Y = !Y>Y - 2!u, which is similar to Eq. (3.6), which is similar to Eq.
(3.6), except that in Eq. (3.6), !Y>Y = 3 for the United States, where for this economy, !Y>Y could differ from 3. Compare your answers from the two sets of calculations.
Step by Step Answer:
Macroeconomics Global Edition
ISBN: 978-1292318615
10th Edition
Authors: Andrew Abel ,Ben Bernanke ,Dean Croushore