What Is Okun's Law? Give an Example of How It

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The Answer is Okun's law refers to the relationship between the unemployment rate and the GDP gap, which was quantified in studies done by the economist Arthur Okun.His studies indicated that for every 1% that the actual unemployment rate exceeds the natural unemployment rate, there is a 2% GDP gap shortfall.If the actual unemployment rate was 8.3% and the natural unemployment rate was 6.5%, then there would be a 3.6% (= (8.3 - 6.5)*2) GDP gap.Thus, the ratio is 1:2 in terms of unemployment rate-GDP gap link.

What Is Okun's Law? Give an Example of How It

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