Question

Okun's law states that​ ____________.

a. when growth of gdp is​ positive, it tends to be positive in subsequent quarters.
b. when growth in real gdp is above​ 3%, unemployment drops and when it is below​ 3%, unemployment increases.
c. during​ recessions, firms tend to not lay off workers if they believe the slowdown will be temporary.
d. when growth in real gdp is below​ 3%, unemployment drops and when it is above​ 3%, unemployment increases.

Answer 1

The answer is option B.
Okun's Law states that when growth in real gdp is above​ 3%, unemployment drops and when it is below​ 3%, unemployment increases.
Okun's law is actually a comparison or relationship between the unemployment and country's production. Arthur Melvin Okun is a person who proposed this relationship and after his name, this law was named as Okun's law.