Q1. Okun's Law is written as uu(1)=0.4(gy3%).

What is the sign of uu(1) in a recovery?

During a recovery, unemployment is falling /or rising , making the sign of uu(1) negative /or positive

Q2. In the equation forOkun's Law writtenabove, where does the3% number comefrom?

A.

It is the sum of the anchored inflation rate and the central bank real policy rate in the United States.

B.

It is the sum of thelabor-force growth rate and thelabor-productivity growth rate in the United States.

C.

It is the anchored inflation rate in the United States.

D.

It is the natural rate of unemployment in the United States.

Q3. Why is the coefficient on the term gy3% equal to 0.4 and not 1? (Check all that apply.)

A.

This number reflects actual output as a fraction of potentialoutput, but these are rarely equal in the United States.

B.

An increase in the employment rate does not lead to aone-for-one decrease in the unemployment rate.

C.

Training new employees is costly so firms hoard workers during recessions.

D.

During recessions more people than expected are laid off.

Q4. Suppose the number of immigrants per year allowed to enter the United States is sharply decreased.

How wouldOkun's Lawchange?

If the number of immigrants sharply decreased, there would be a rise or fall in labor hoarding or potential output, causing the number -0.4 or 3 in the equation to become

smaller or larger

Please Answer all questions. Answer all the bold (example: smaller or larger)