The Version of Okun's Law Studied in Chapter 2 Assumes

question 105

Multiple Choice

The version of Okun's law studied in Chapter 2 assumes that with no change in unemployment,real GDP normally grows by about 4 percent over a year.If the unemployment rate rose by 1 percent over a time period too brief for normal growth to occur,Okun's law would predict the corresponding change in real GDP to be a:

• A) rise of about 0.5 percent.
• B) rise of about 2 percent.
• C) fall of about 2 percent.
• D) fall of about 0.5 percent.

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