In a typical recession the unemployment rate rises 2 1 2


Question: In a typical recession, the unemployment rate rises 2 1 2%. Assume that at full employment, the unemployment rate is 4 1 2%, and it rises to 7% by the end of the recession. Typically it takes the economy about three years to return to full employment. Using the ‘‘Okun's Law'' approximation, how fast would the economy be growing during that part of the expansion phase?

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Microeconomics: In a typical recession the unemployment rate rises 2 1 2
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