Okun's law states that if the unemployment rate increases by 1percentage point, then
A)real GDP will fall by about 2 percent
B) real GDP will also fall by about 1 percent
C) real GDP will fall by about 0.5 percent
D)the rate of inflation will decline by about 2 percent
E)the rate of inflation will decline by about 0.5 percent

Question

Quizplus · Accepted Answer

Okun's law states that there is a negative relationship between unemployment and real GDP. Specifically, for every 1 percentage point increase in the unemployment rate, there is an estimated 2 percent decrease in real GDP. Therefore, the correct answer is A.

Okun's Law States That If the Unemployment Rate Increases by 1percentage