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Question: The US unemployment rate rose from 5.8% in 1979, which was full employment then, to a peak of 10.7% in late 1982. It then returned to a full employment rate of 5.3% in 1989.
(A) Based on Okun's Law, what do you think the average growth rate of the economy was from 1979 through 1982, and from 1983 through 1989?
(B) In 1981, Reagan fired the PATCO workers because they illegally went on strike. What impact do you think that had on the real wage and employment gains for the rest of the decade?
(C) Why did it take the US economy seven years to return to full employment?
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