Using Okun's Rule of Thumb, If Trend Growth Is 3

question 26

Multiple Choice

Using Okun's rule of thumb, if trend growth is 3 percent and the unemployment rate rises by 2 percentage points, output would be expected to have:

• A)fallen by 1 percentage point.
• B)risen by 1 percentage point.
• C)fallen by 2 percentage points.
• D)risen by 2 percentage points.

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Definitions:

Assets

Economic resources owned or controlled by an individual or entity that are expected to provide future benefits.

Sales

The process of selling goods or services to customers, typically in exchange for money or other forms of compensation.

Acid-Test Ratio

A financial metric used to gauge a company's liquidity by comparing its most liquid assets, without including inventory, to its current liabilities.

Profitability

This refers to the ability of a business to generate earnings as compared to its expenses over a specified period.