The Proposition That Each Extra Percentage Point of Cyclical Unemployment

question 34

Multiple Choice

The proposition that each extra percentage point of cyclical unemployment is associated with about a two-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.
• E) decreasing returns to capital.

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