Okun's law tells us that greater output means a lower rate of unemployment.Thus, an increase in aggregate demand moves the economy along the Phillips curve to a point with lower unemployment and higher inflation.

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Okun's law states that there is an inverse relationship between output and unemployment. Thus, if output increases, unemployment decreases. Furthermore, the Phillips curve shows the trade-off between inflation and unemployment, and an increase in aggregate demand can shift the economy along the curve to a point with lower unemployment and higher inflation.

Okun's Law Tells Us That Greater Output Means a Lower