The Version of Okun's Law Studied in Chapter 10 Assumes

question 35

Multiple Choice

The version of Okun's law studied in Chapter 10 assumes that with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate rose by 2 percentage points over a year, Okun's law predicts that real GDP would:

• A) decrease by 1 percent.
• B) decrease by 2 percent.
• C) decrease by 3 percent.
• D) increase by 1 percent.

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Definitions:

River

A large natural stream of water flowing in a channel to the sea, a lake, or another river, often a central feature in ecosystems and human civilizations.

Lower Reaches

The downstream part of a river close to its mouth where it meets a larger body of water.

Aquifer

An underground layer of water-bearing permeable rock, rock fractures or unconsolidated materials (gravel, sand, or silt) that can yield significant quantities of water.

Well

A deep hole drilled or dug into the ground to access water, oil, gas, or other underground resources.