According to Okun's law, each extra percentage point of ________ unemployment is associated with a ________ widening of a negative output gap, measured in relation to potential output.
A)frictional; 2 percent
B)frictional; 0.5 percent
C)cyclical; 2 percent
D)cyclical; 0.5 percent

Question

Quizplus · Accepted Answer

Okun's law describes the relationship between cyclical unemployment and the output gap: each extra percentage point of cyclical unemployment is associated with about a 2 percent widening of a negative output gap, measured in relation to potential output.

According to Okun's Law, Each Extra Percentage Point of ________