According to Okun's Law, when the natural employment rate is 6 per cent and potential GDP is $10 trillion, then when actual employment is 5 percent, real GDP is

Question

Quizplus · Accepted Answer

Okun's Law suggests that for every 1% decrease in the unemployment rate, GDP increases by about 2%. With a 1% decrease from the natural rate (6% to 5%), GDP would increase by 2% of $10 trillion, which is $0.2 trillion, making real GDP $10.2 trillion.

According to Okun's Law, When the Natural Employment Rate Is