According to Okun's law, when cyclical unemployment increases by one percentage point, the recessionary gap ________ by ________ percent of potential output.
A)widens; one
B)widens; two
C)closes; one
D)closes; two

Question

Quizplus · Accepted Answer

Okun's law states that 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, When Cyclical Unemployment Increases by One