Question

If the natural rate of unemployment was 5 percent, the current unemployment rate was 6 percent, and potential GDP was $4,000 billion, then according to Okun's law the economy would have sacrificed

Answer 1

Answer:

$80 billion

Explanation:

Okun law equation: GDP gap = Actual GDP * ((Unemployment rate - Natural rate)/100)*2)

GDP gap = $4,000 * ((6-5)/100*2)

GDP gap = $4,000 * 0.02

GDP gap = $80 billion

Therefore, $80 billion in an output level thus, would be what the economy would have sacrificed.