According to Okun's law,
A) when real GDP is below potential output, unemployment will be relatively low
B) when real GDP is below potential output, unemployment will be relatively high.
C) when the inflation rate is below the natural inflation rate, unemployment will be relatively low.
D) when the inflation rate is below the natural inflation rate, unemployment will be relatively high.

Question

Quizplus · Accepted Answer

Okun's law posits a negative relationship between unemployment and GDP, meaning that when real GDP is below potential output (indicating an economic downturn or recession), unemployment rates will be relatively high as businesses cut back on production and lay off workers.

According to Okun's Law