The change in the unemployment rate is -1%.
Given to us:
output grew = 7%
full-employment output grew = ΔY = 5%
According to Okun's law,
employment output - 2 (change in the unemployment rate) = output grew
5% - 2(Δu) = 7%
- 2(Δu) = 7% - 5%
- 2(Δu) = 2%
[tex]\bold {\Delta u = \frac{2\%}{-2} }[/tex]
[tex]\bold{\Delta u = -1\%}}[/tex]
Hence, the change in the unemployment rate is -1%.
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