Which of the following is not a reason that Okun's Law coefficient is greater than one?
A) technological change occurs.
B) the unemployment rate does not count discouraged workers.
C) average hours of work per week increase as the economy comes out of a recession.
D) when business returns to normal, firms initially ask existing employees to work longer hours.

Question

Quizplus · Accepted Answer

Okun's Law describes the relationship between unemployment and GDP, suggesting that a 1% increase in unemployment results in a greater than 1% decrease in GDP. Technological change, unlike the other options, does not directly relate to the dynamics between unemployment and output that Okun's Law addresses. It can lead to productivity improvements that might not immediately reflect in employment levels, thus not fitting the rationale behind why Okun's Law coefficient is greater than one.

Which of the Following Is Not a Reason That Okun's