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Question

Consider an economy where current output is $7,840, but long-run potential 

output is $8000. The current unemployment rate is 6%. 

a) Using Okun's Law, what is the "natural" rate of unemployment in this economy? What is cyclical unemployment when current output is $7,840? (Show your work)

PLEASE EXPLAIN ANSWERS


b)What type of "output gap" is this economy in? 


PLEASE EXPLAIN ANSWERS

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