According to Okun's Law, When Cyclical Unemployment Increases from 2

question 98

Multiple Choice

According to Okun's law, when cyclical unemployment increases from 2 to 3 percent, the recessionary gap widens from ________.

• A)4 percent to 6 percent
• B)−2 percent to −3 percent
• C)0 percent to 1 percent
• D)−4 percent to −6 percent

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Definitions:

Production Possibilities Frontier

A graphical representation showing the maximum amount of two goods or services that can be produced within a given set of resources.

Recession

A brief spell of economic backslide, with a noted reduction in commerce and industrial production, usually spotted by a fallen GDP in two consecutive quarters.

Employment

A relationship between two parties, usually based on a contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or other entity is the employer and the other is the employee.

Unemployment Rate

The demographic of the labor force that is without employment but actively hunting for work.