You Are Given the Following Information About the Economy $\bar{\gamma}$

question 68

Essay

You are given the following information about the economy.

The natural rate of unemployment is 0.04,Okun's Law is that ( $\bar{\gamma}$ - Y)/ $\bar{\gamma}$ = 2(u - $\bar u$ ),and the Phillips curve relationship is π = π^e - 2 (u - 0.04).
(a)What was the full-employment level of output in each year?
(b)Calculate the growth rate of full-employment output each year.
(c)If expected inflation was 0.04 for all four years,what was the inflation rate each year?

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