Unemployment, Macroeconomics

Assignment Help:

what is okun''s law ? In economics study, Okun's law also named after Arthur Melvin Okun is an empirically observed relationship relating among unemployment to losses in a specific country's production. The "gap version" shows that for every 1% increasing in the rate of unemployment, a country's GDP will be at additional roughly 2% lower than their potential GDP. The "difference version" shows the relationship among quarterly changes in unemployment & quarterly changes in real GDP. The stability & usefulness of the law has been disputed. The term refers to economist Arthur Okun who proposed this relationship in 1962.

Imperfect relationship

Okun's law is more precisely known "Okun's rule of thumb" due to it is primarily an empirical inspection rather than a result resulting from theory. Okun's law is estimated because factors other than employment for example as productivity affect output. In Okun's real statement of his law, a 3% increase in resultant output corresponds to a 1% decline in the rate of unemployment; a .5% increase in labor force participation; a .5% increase in hours worked per an employee; and a 1 % increase in output per hours worked called labor productivity.


Related Discussions:- Unemployment

Explain the gaap-determine the impairment loss, Panzer is a U.S. company.  ...

Panzer is a U.S. company.  It originated in the 1970s as a family-owned business that manufactures fine watches. The family continued to build the company by reinvesting profits in

Help, Given the following data for StewieLand, a closed economy in 2012… r...

Given the following data for StewieLand, a closed economy in 2012… real gdp = $20,000 public savings = $1,000 consumption = $11,000 tax revenue collected = $4,000 Solve for

Other bankers and wall street firms, Some charge that the Crisis of 2008 wa...

Some charge that the Crisis of 2008 was caused by the "greed" of Wall Street firms and other bankers. Do you agree with this view? Do you think there was more greed on Wall Street

Cross-price elasticity of demand, You are the manager of a firm that receiv...

You are the manager of a firm that receives revenues of $50,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -3,

Two-period model, Suppose that a household in a two-period model has incom...

Suppose that a household in a two-period model has income of $30,000 in period 1 and $25,000 in period 2, and the interest rate is 75 percent. Assume that the price of the good is

Limitations of rational expectations school, Limitations of the theory of r...

Limitations of the theory of rational expectations: Critics of this theory note that if policy makers have more information about the economy or their own actions than d

State the term- - gdp is a flow, State the term- - GDP is a flow Lastl...

State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni

Summary of the cross model, Summary of the cross model The below list...

Summary of the cross model The below list summarizes the cross model and associates it to classical model:  Labor Market: Real wages W/P is exogenous in cross model

Advantage and disadvantage of outsourcing, What are the pros and cons of ou...

What are the pros and cons of outsourcing in order to keep prices down?

What is the development process, What is the development process? Deve...

What is the development process? Development is measured through outcomes that are development occurs while key indicators of human well-being enhance. A reduction of poverty

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd