Question

According to Okun's law, each extra percentage point of ________ unemployment is associated with a ________ widening of a negative output gap, measured in relation to potential output.

A. cyclical; 2 percent
B. cyclical; 0.5 percent
C. frictional; 2 percent
D. frictional; 0.5 percent

Answer 1

According to Okun's law, each extra percentage point of cyclical unemployment is associated with a 2 percent widening of a negative output gap, measured in relation to potential output.

Step-by-step explanation:

According to Okun's law, each extra percentage point of cyclical unemployment is associated with a 2 percent widening of a negative output gap, measured in relation to potential output.