Neco 2023 Economics Question 35
Practice objective / multiple choice question 35 from the 2023 Neco Economics examination.
In an economy Okun's law is expressed as \(\Delta U = -\beta (g - g^{*})\), where \(U\) is the unemployment rate (in \%\), \(g\) is real GDP growth (in \%\), \(g^{*}=3\%\) is the natural growth rate and \(\beta=0.5\). If the economy grows by \(5\%\) in a year and the initial unemployment rate is \(9\%\), what is the unemployment rate after that year? Subsequently, a policy reduces \(\beta\) to \(0.4\) and GDP growth falls to \(2\%\). Starting from the unemployment rate obtained previously, what is the unemployment rate after one more year? Give the final unemployment rate to one decimal place.
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About This Question
This is Neco 2023 Economics Question 35. It is one of the objective questions from the 2023 Neco Economics examination.
Difficulty level: Medium .
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