According to Okun's law, if the unemployment rate is 7 percent and the natural unemployment rate is 5 percent, potential GDP is _{--------------------} than real GDP.

Question

Quizplus · Accepted Answer

Okun's law suggests that for every 1% increase in the unemployment rate above the natural rate, a country's GDP will be roughly an additional 2% lower than its potential GDP. Here, the unemployment rate is 2% above the natural rate, so potential GDP is approximately 4% less than real GDP.

According to Okun's Law, If the Unemployment Rate Is 7