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  • 1. In 1992 the unemployment rate was 6.9%. In 1993 the unemployment rate was 7.5%. Calculate the change in the unemployment rate.
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  • 2. The GDP growth rate in 1992 was 3.3%. Is it close to the natural GDP growth rate in your graph? Explain how your findings support Okun\'s law.
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  • 3. What are some reasons why output changes less than unemployment?
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  • 4. Okun\'s law predicts what happens to output. Suppose that the government uses both fiscal and monetary policy to decrease unemployment by 1% point from its natural rate. What do economists predict will happen to GDP?
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  • 5. In this lesson, the author found the natural rate of unemployment to be 5.8%. The Congressional Budget Office estimates the natural rate to be 5.2%. When the economy is at its natural rate, how is inflation changing?
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  • 6. What is the Non-Accelerating Inflation Rate of Unemployment?
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  • 7. What would you expect to happen to prices if the actual rate of unemployment was less than the natural rate?
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  • 8. What is the natural rate of unemployment in percent?
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