The Bureau of Labor Statistics reported that in June 2010, the unemployment rate in the United States was 9.5 percent. In November 2007, prior to the beginning of the recession of 2007-2009, the BLS reported an unemployment rate of 4.7 percent.
a. According to Okun's Law, by how much would GDP need to increase for the unemployment rate to decrease from the June 2010 rate back to the pre-recession rate of November 2007?
b. In June 2010, the annual GDP growth rate in the United States was 2.4 percent. At this rate of growth, how long does Okun's Law predict it would take for the economy to return to the unemployment rate of November 2007?