If the Negative GDP Gap Were Equal to 4 Percent

question 91

Multiple Choice

If the negative GDP gap were equal to 4 percent of the potential GDP, Okun's law suggests that the actual unemployment rate would exceed the natural rate of unemployment by

• A) one percentage point.
• B) two percentage points.
• C) three percentage points.
• D) four percentage points.

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Definitions:

Annuity

An investment product offering a regular payout to a beneficiary, commonly employed to generate a steady income for those who are retired.

Net Cash Inflow

The difference between all cash receipts and all cash payments over a period of time, showing the net increase or decrease in cash.

Time Value of Money Concept

The principle that money available now is worth more than the same amount in the future due to its potential earning capacity.

Capital Investment Analysis

The process of evaluating and making decisions about capital expenditures or investments in projects that will have long-term implications for a business.