According to Okun's law,an increase in the unemployment rate will cause ________ in the level of employment and ________ in the level of output.

Question

Quizplus · Accepted Answer

Okun's law states that there is a negative relationship between the unemployment rate and the level of output or real GDP. Specifically, for every 1% increase in the unemployment rate above the natural rate of unemployment, there is a 2% decrease in the level of output. Therefore, an increase in the unemployment rate would cause a decrease in the level of employment and a decrease in the level of output.

According to Okun's Law,an Increase in the Unemployment Rate Will