The Proposition That Each Extra Percentage Point of Cyclical Unemployment

question 115

Multiple Choice

The proposition that each extra percentage point of cyclical unemployment is associated with about a 2 percentage point increase in the output gap, measured in relation to potential output, is known as:

• A) the recessionary gap.
• B) the expansionary gap.
• C) the Fisher effect.
• D) Okun's law.

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