MacroeconomicsSection9_1 - since more workers are competing...

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ANSWERS TO END-OF-CHAPTER PROBLEMS SECTION 9.1 Quick Check 1. a. False. The unemployment rate rises when output growth is less than the normal rate and decreases when output growth is greater than the normal rate. b. True. c. True. 2. a. The unemployment rate will increase by 1% per year when g=0.5%. Absent output growth, productivity growth tends to increase the unemployment rate, since fewer workers are required to produce a given quantity of goods. Absent output growth, labor force growth also tends to increase the unemployment rate,
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Unformatted text preview: since more workers are competing for the same number of jobs. Therefore, unemployment will increase unless the growth rate exceeds the sum of productivity growth and labor force growth. b. For the unemployment rate to decrease by 0.5% per year for the next four years, output must grow at 4.25% per year for each of the next four years. c. Okun’s law is likely to become u t-u t-1 =-0.4*( g yt-5%)...
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This note was uploaded on 12/22/2011 for the course MACROECON 301 taught by Professor Christinanagy during the Fall '09 term at University of Washington.

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