1 utilize okuns law to answer the questions

Question

1. Utilize Okun's law to answer the questions below;

u_t - u_t-1 = -0.4(g_yt - 3%) Assuming u_t-1 = 7%

a. Calculate the change in u (u_t - u_t-1) for each of the following values of g_yt: 5%, 7%, 9%. How much has output growth increased? What happens to the change in unemployment due to this increase?

b. Calculate the change in u (u_t - u_t-1) for each of the following values of g_yt: 2.5%, 1.5% and 0. How much has output growth decreased? What happens to the change in unemployment due to this increase?

c. Calculate the change in u (u_t - u_t-1) when g_yt is 3%. What must the growth rate of output be to keep u_t from changing?