According to Okun's Law, When the Natural Employment Rate Is

question 5

Multiple Choice

According to Okun's Law, when the natural employment rate is 6 per cent and potential GDP is $10 trillion, then when actual employment is 5 percent, real GDP is

• A) $8 trillion.
• B) $10.1 trillion.
• C) $9.8 trillion.
• D) $10.2 trillion.
• E) $9.9 trillion.

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Definitions:

Employee

Individual hired by a company or another person to conduct tasks, services or jobs for compensation.

Deposit Today

The act of placing money into a financial account or investment at the current date.

Discount Rate

The interest rate used to discount future cash flows to their present value, essential in the valuation of investments and projects.

Prepaid

Expenses paid in advance for goods or services to be received in the future.