Some Economists Argue That Okun's Law Overstates the Cost of Cyclical

question 94

Multiple Choice

Some economists argue that Okun's Law overstates the cost of cyclical unemployment because

• A)the cost of retraining workers must be offset against the loss in output that occurs when workers are unemployed.
• B)if efficiency wages prevail, and workers are paid their real wage, already employed workers will reduce their effort, reducing output.
• C)it ignores the fact that leisure increases during a recession.
• D)it ignores the loss of government revenue and additional government expenditures that occur when unemployment rises.

---

Definitions:

Bonuses

Extra pay awards for special performance accomplishments.

Mix And Depth

Generally refers to the variety and complexity within a particular aspect, such as product offerings in business or research topics in academia.

Skills

The ability to perform tasks and solve problems due to knowledge, practice, aptitude, or a combination of these.

Performance Measurement

The process of evaluating the efficiency and effectiveness of an individual’s or organization’s output.