Using Okun's rule of thumb, if trend growth is 3 percent and the unemployment rate falls by 0.5 percent, output would be expected to have:

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Okun's rule of thumb suggests that for every 1% decrease in the unemployment rate, GDP is expected to increase by about 2%. Therefore, a 0.5% decrease in unemployment would lead to a 1% increase in GDP. Adding this to the trend growth of 3%, output would be expected to rise by 4 percentage points.

Using Okun's Rule of Thumb, If Trend Growth Is 3