According to Current Estimates of Okun's Law, If the Output

question 68

Multiple Choice

According to current estimates of Okun's law, if the output gap is 3%, the natural rate of unemployment is 4%, and the expected rate of inflation is 5%, then the unemployment rate is _____%.

• A) 3.5
• B) 3
• C) 2.5
• D) 1.5

---

Definitions:

Global Minimum-Variance Portfolio

The Global Minimum-Variance Portfolio is an investment portfolio constructed to achieve the lowest possible level of risk (variance) for its expected return, using assets from around the world.

Perfectly Negatively Correlated

A relationship between two securities in which one's price moves in the opposite direction of the other's, resulting in a correlation coefficient of -1.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to quantify the risk of an investment.

Risk Aversion

The preference of investors to avoid risk, leading them to invest in safer securities with lower potential returns.