Answer the question on the basis of the following information for a specific year in a hypothetical economy for which Okun's law is applicable: Potential Real GDP = $\$ 200$ Billion
Natural Rate of Unemployment $= 6$ Percent
Actual Rate of Unemployment $= 12$ Percent Refer to the given data.The amount of output being forgone by the economy is:

Question

Quizplus · Accepted Answer

Okun's law states that for every 1% increase in the unemployment rate above the natural rate, a country's GDP will be roughly an additional 2% lower than its potential GDP. The unemployment gap is 6% (12% - 6%), so the GDP gap is 12% (6% * 2). Therefore, the forgone output is 12% of $200 billion, which is $24 billion.

Answer the Question on the Basis of the Following Information $200\$ 200$200

Answer the Question on the Basis of the Following Information $\$ 200$