Suppose Potential GDP Is $100 Billion and the Natural Unemployment

question 21

Multiple Choice

Suppose potential GDP is $100 billion and the natural unemployment rate is 5 percent. If the unemployment rate is 6 percent, then according to Okun's Law real GDP is

• A)$102 billion.
• B)$98 billion.
• C)$100 billion.
• D)$101 billion.
• E)$99 billion.

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Definitions:

Specialize

The focus on a narrow area of activity or field of study, which often leads to increased efficiency and effectiveness in producing goods or offering services.

Tasks

Specific pieces of work to be done, often as part of a broader project or job.

Equilibrium

The point at which market demand and supply equalize, stabilizing price levels.

Equitable Distribution

The fair allocation of resources among all members of a community or society.