The Version of Okun's Law Studied in Chapter 9 Assumes

question 34

Multiple Choice

The version of Okun's law studied in Chapter 9 assumes that, with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate fell by 1 percentage point over a year, Okun's law predicts that real GDP would:

• A)decrease by 1 percent.
• B)decrease by 2 percent.
• C)increase by 4 percent.
• D)increase by 5 percent.

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Definitions:

Leisure

Time spent away from work and other obligations, used for relaxation or chosen activities.

Uber

A technology platform that offers services such as ride-hailing, food delivery, and a freight transportation, revolutionizing traditional transportation and logistic services.

Income Effect

Variations in the income levels of an individual or within an economy, and how these variations influence the demand for specific goods or services.

Wage Decrease

The reduction in the rate of pay received by employees for their labor.