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Okun's Rule of Thumb States That A

Question 4

Multiple Choice

Okun's rule of thumb states that a:

A) 2 percentage point rise in the unemployment rate will tend to be associated with a 1 percent fall in output from its trend and vice versa.
B) 2 percentage point rise in the unemployment rate will tend to be associated with a 1 percent rise in output from its trend and vice versa.
C) 1 percentage point rise in the unemployment rate will tend to be associated with a 2 percent fall in output from its trend and vice versa.
D) 1 percentage point rise in the unemployment rate will tend to be associated with a 2 percent rise in output from its trend and vice versa.

Correct Answer: