Question

What is Solow Growth Rate? What is Okun’s Law?

Answer 1

As we know that, growth rate is the rate which shows how the econnomy is changing over time. Solow growth model is an exogenous growth model of economic growth. The Solow model  analyzes changes in the level of output in an economy over time as a result of changes in the population. growth rate, the savings rate, and the rate of technological progress. Steady state is an important feature in Solow's model. The Solow model makes the prediction that whether economies converge depends on why they differed in the first place.

As we know that, Okun's law is an important law regarding unemployment and the gross national product.  Okun's law pertains to the relationship between the U.S. economy's unemployment rate and its gross national product (GNP). It states that when unemployment falls by 1%, GNP rises by 3%. However, the law only holds true for the U.S. economy and only applies when the unemployment rate is between 3% and 7.5%. Okun's Law describes the relationship between production output and employment. In order for manufacturers to produce more goods, they must hire more people. The inverse is also true. Less demand for goods leads to a decrease in production, in turn prompting layoffs. But in normal economic times, employment rises and falls in direct proportion to the rate of production at a set amount.

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