Defining u as the unemployment rate and as the natural rate of unemployment, Okun's law is given by the following equation:
A) .
B) .
C) .
D) .
E) .

Question

Defining u as the unemployment rate and  as the natural rate of unemployment, Okun's law is given by the following equation:
A) . 
B) . 
C) . 
D) . 
E) .

Quizplus · Accepted Answer

Okun's law is given by the equation: 
u − u*N = −0.5(g − g*), 
where u is the unemployment rate, u*N is the natural rate of unemployment, g is the growth rate of real GDP, and g* is the trend growth rate of real GDP.

Therefore, the correct answer is B, which is the only option that includes the term "Okun's law" and "natural rate of unemployment".

Defining U as the Unemployment Rate and as the Natural