Question

A) A country's natural unemployment rate is 4 percent and its actual unemployment rate is 7 percent, what is its cyclical unemployment rate? Instructions: Enter the value for the output gap as an absolute number B) According to Okun's law, this country would have a recessionary output gap of percent percent.

Answer 1

Answer:

a. Cyclical unemployment rate = 3%

b. According to Okun's law, this country would have recessionary output gap of 6%

Explanation:

Note: The full and organized question is attached as picture below

a. A country's natural unemployment rate = 4% & its actual unemployment rate = 7%

Cyclical unemployment rate = Actual unemployment rate - Natural unemployment rate

Cyclical unemployment rate = 7 - 4

Cyclical unemployment rate = 3%

Cyclical unemployment is known to happen when the overall demand for goods and services in an economy cannot reach the level of full employment

b. Okun's law is known as the relationship between the economy unemployment rate and its Gross National Product

According to Okun's law, this country would have recessionary output gap of 6%. This comes from if a country's recessionary output gap grows by 4%, then its cyclical unemployment rate will increase by 2%

Answer 2

a. The cyclical unemployment rate is 3%

Cyclical unemployment can be described as the type of unemployment that exists because full demand for goods and services cannot attain full employment.

The natural rate of unemployment = 4%

The actual rate of unemployment = 7%

cyclical unemployment =

Actual - natural

7% - 4% = 3%

Therefore the cyclical unemployment rate is 3%.

b. According to Okun's law the recessionary gap would be 6%.

The reason for this is that the law states that when there is natural unemployment, the recessionary gap can be gotten by adding 2% to the natural rate.

4%+2% = 6%

Read more on https://brainly.com/question/14451148?referrer=searchResults