Question: The given equation is Y - Y = 2 ( u - T ) , and since natural rate of unemployment is 0 . 0

The given equation is Y-Y =2(u-T)
, and since natural rate of unemployment is 0.06, we have Y-Y =214-0.06)
or 1-=2(u -0.06)
or =1-2(u -0.06
or Y
1-2u -0.06)
or va
1-2u -0.06)
.
We have the table as below.
Year \\mathbf{\\overline Y}
1979.2
21030
31064.8
41105.4
Since we have 2- Y_
, the growth rate of full employment output would be as 2+_
. The growth rate of full employment output in year 2 would be as AY
1030-940
+2(0.06-0.08)
940
or
90
in (-0.04)
or ==0.0957-0.04
or =0.0557=5.57%
5.6%
.
According to the calculated full employment values, the growth rate in year 2 is \Delta \Upsilon
1030979.2
979.2
or 50.8
979.2
or AY
-=0.0519%5.19%%5.2%
.

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