The United States witnessed an expansion almost a decade longduring the 1990s, a

Question

The United States witnessed an expansion almost a decade longduring the 1990s, a period of significant economic growth with lowunemployment. Again consider the output gap in theUnited States during the expansion. Okun's Law predicts that_____. A.   The actual unemployment rate is abovethe natural rate B.   The actual unemployment rate is belowthe natural rate C.   The actual unemployment rate is equalto the natural rate The United States witnessed an expansion almost a decade longduring the 1990s, a period of significant economic growth with lowunemployment. Again consider the output gap in theUnited States during the expansion. Okun's Law predicts that_____. Again consider the output gap in theUnited States during the expansion. Okun's Law predicts that_____.

Explanation / Answer

A. The actual unemployment rate is above the natural rate. Explanation Output gap is the difference between the maximum efficient and thereal/predicted outcome. Per Okun's law , the actual unemployment isabove the natural (said) rate.

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