Question

Explain how the recognition that macroeconomic policymaking is an inexact science affects your recommended policy response to the following situations: a. Your estimate of the natural rate of unemployment is 5 percent, and the actual unemployment rate is 5.5 percent. If you recognize macroeconomic policymaking as an inexact science, you would interpret that the difference is: serious enough to require a policy change. not a measurement error, but not serious enough to warrant a policy change. due to a difference in unemployment expectations. due to a measurement error. b. Your estimate of the natural rate of unemployment is 5 percent, and the actual unemployment rate is 8 percent. Your understanding will be that: it is a measurement error. unemployment has risen above the natural rate. macroeconomics is an inexact science. people's expectations are unemployment are very high.

Answer 1

a. If you estimated that the natural rate of state is 5%, and therefore the actual proportion is 5.5%, therefore to understand the economic science policy making is associate approximate knowledge which would possibly mean that you might interpret the distinction as existence of an error in the results and thus it is not justify any change in policy.

b. If you estimated that the natural rate of state is 5%, and therefore the actual proportion is 8%, thus it is given the inaccuracy of economic science policy making, you're doubtless to consider that state has up considerably higher than the expected level. Conversely, you'd not acumen extended it'd hold policy to have an effect on a modification within the proportion.