Answer to Question #146700 in Macroeconomics for jarrett

Question

The economy of Omega operates according to Okun's law. Omega is currently
experiencing a recessionary gap of 2% of potential GDP. If the natural rate of
unemployment equals 6 percent, what is the actual rate of unemployment in Omega?

Answer 1

The GDP is 2% below, meaning that the unemployment rate is 1% above the natural rate of employment.

Hence the actual rate of employment =6%+1%

=7%

Actualrateofunemployment=7%