Okun's law states that one extra percentage point in unemployment causes
A)a 2 percent fall in GDP
B)a 0.5 percent fall in GDP
C)a 2 percent fall in the rate of inflation
D)a 0.5 percent fall in the rate of inflation
E)a 2 percent increase in the sacrifice ratio

Question

Quizplus · Accepted Answer

Okun's law posits that a one percentage point increase in the unemployment rate is associated with a 2 percent fall in real GDP.

Okun's Law States That One Extra Percentage Point in Unemployment