a) What is Okun's law? Suppose the unemployment rate is 5% and actual output is 1% below potential output. Assuming Okun's law holds with "Beta" = 2, what will be the rate of frictional plus structural unemployment? Explain briefly the relationship between output gap and unemployment.

In response to the covid-19 pandemic, many governments responded by an economic stimulus package to mitigate the negative impact of the pandemic on affected families. Changes in economic policies will frequently have an impact on the unemployment rate. Explain whether each of the policy changes described is likely to: (1) affect frictional or structural unemployment and (2) increase or decrease the measured unemployment rate.a) An increase in the number of weeks of employment insurance that unemployed workerscan receive. b) An increase in the minimum wage rate  a) The government introduced new job-training programs to help people who lost their jobs in the affected sectors switch to other sectors.

Suppose that the natural rate of unemployment in a particular year is 5 percent and the actual rate of unemployment is 9 percent. What will be the amount of cyclical unemployment and the size of the GDP gap in percentage-point terms, according to Okun law? Select one: a. 45 % cyclical unemployment, 9/5 percent GDP gap b. 4 % cyclical unemployment, 8 percent GDP gap c. 5 % cyclical unemployment, 10 percent GDP gap d. 5 % cyclical unemployment, 9 percent GDP gap

Firms in the country of Merka, which experiences varying levels of unemployment over time, face a very competitive labor market. Classify the given events according to how each would affect Merka's unemployment rate. Increase in the unemployment rate Decrease in the unemployment rate Answer Bank decreased unemployment benefits increase in the minimum wage introduction of employment-at-will doctrine increase in unions' influence