According to Okun's law, if the Federal Reserve wants to reduce unemployment, it should ________ interest rates, which would ________ output.
A) reduce; reduce
B) increase; increase
C) reduce; increase
D) reduce; not change
E) not change; increase

Question

Quizplus · Accepted Answer

According to Okun's law, there is an inverse relationship between unemployment and output. Therefore, to reduce unemployment, the Federal Reserve should increase output. One way to do this is by reducing interest rates to encourage borrowing and investment, leading to increased production and output.

According to Okun's Law, If the Federal Reserve Wants to Reduce