Unformatted text preview: Y is the actual level of output, and u is the actual level of unemployment. Show that if Y Y is approximately equal to 1, and the natural rate of unemployment, u , does not change over time (i.e., ± u ± t ± . u ± , than we can express Okun’s law as: . Y Y " . Y Y ± " 3.0 . u that says that a one percent increase in the unemployment rate is equivalent to 3 percent shortfall in the growth rate of actual output relative to the normal growth rate of output....
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This note was uploaded on 09/11/2011 for the course ECO 325 taught by Professor G. during the Spring '09 term at University of Toronto.
- Spring '09