Which of the following is true in regards to Okun's law?
A)employment does not increase commensurately with output rises because firms tend to hoard labor
B)when demand increases,firms tend to work their employees harder and longer
C)it is Okun's prediction of the negative relationship between the output and unemployment gaps that allows the modern Phillips curve to be translated into the AS curve
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Okun's law describes the empirical relationship between changes in the unemployment rate and the growth rate of an economy's output. It suggests that as output increases, unemployment decreases, but not in a one-to-one relationship, due to factors such as labor hoarding and increased work intensity. This relationship also underpins the translation of the Phillips curve, which describes the inverse relationship between rates of unemployment and corresponding rates of wage rises in an economy, into the aggregate supply (AS) curve in macroeconomic analysis.

Which of the Following Is True in Regards to Okun's