Okuns Law suggest that, o

Okuns Law suggest that, o

Okuns Law suggest that, over the course of the business cycle , a change in the unemployment rate of 1% point will be accompanied by a 3% change in output. Using the formulaY=(Y/H)(H/N) (1- U)L,Where Y/H is output per hour worked , H/N is hours per worker , N is the number of employed workers, U is the unemployment rate, and L is the Labor force , explain in what direction and why some of the factors other than Y and U might change. (Note that, if W 5 XYZ, then for small changes the percentage change in W is given by the sum of the percentage changes in X, Y and Z. Note also that 1 2 u 5 N/L and a change in the unemployment rate of 1% point corresponds to approximately a 1% change in N/L

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