Relationship between the outputs and the unemployment rate

Reference no: EM1313855

This problem uses Okun's law to study how the unemployment and inflation rates change when there are demand shocks. Assume that the relationship between the output ratio and the unemployment rate, U is given by the equation U = 6.0 - 0.5 (output ration -100)

When and why were the inflation and unemployment rates negatively correlated?

When and why were the inflation and unemployment rates positively correlated?

Reference no: EM1313855

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