Okun's law suggests that a _____% increase in a positive output gap _____ the unemployment rate by _____%.

Question

Quizplus · Accepted Answer

According to Okun's law, for every 1% increase in a positive output gap, the unemployment rate decreases by 0.5%. Therefore, the correct choice is B, which states that an increase in a positive output gap decreases the unemployment rate by 0.5%. None of the other choices correctly state the relationship between an increase in a positive output gap and the unemployment rate.

Okun's Law Suggests That a _____% Increase in a Positive