According to Okun's Law, When Cyclical Unemployment Increases from 1

question 19

Multiple Choice

According to Okun's law, when cyclical unemployment increases from 1 percent to 2 percent, the recessionary gap increases from ________.

• A)−2 percent to −4 percent
• B)−1 percent to −2 percent
• C)2 percent to 4 percent
• D)1 percent to 2 percent

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Definitions:

Total Output

The entire quantity of goods or services produced by an individual, firm, industry, or economy within a specified period.

Implicit Costs

Costs that represent the value of resources used in production for which no direct payment is made.

Explicit Costs

Direct, out-of-pocket payments a firm makes to purchase the inputs it needs for production, such as wages, rent, and materials.

Calendar Time

The concept of time as measured by calendar units, such as days, months, and years, used in planning and scheduling.