Final answer:
Option A is correct; according to Okun's law, the recessionary gap increases from 2 percent to 4 percent when cyclical unemployment increases from 1 percent to 2 percent. The rise in U.S. unemployment from 4.6% to 5.9% between July 2001 and June 2002 is more likely attributed to cyclical unemployment during an economic downturn.
Step-by-step explanation:
According to Okun's law, when cyclical unemployment increases, there is a corresponding increase in the recessionary gap, which is typically larger than the change in unemployment. Specifically, for every 1% increase in the unemployment rate above the natural rate, a 2% wider recessionary gap is expected. So, if cyclical unemployment increases from 1 percent to 2 percent, the recessionary gap increases from 2 percent to 4 percent, which corresponds to option A. This empirical economic observation suggests that the economy's output decreases by approximately 2% for every 1% increase in the unemployment rate above its natural level.
In the context provided, where the U.S. unemployment rate increased from 4.6% to 5.9% from July 2001 to June 2002, one could more likely attribute the change to cyclical unemployment rather than a change in the natural rate of unemployment. During economic downturns or recessions, cyclical unemployment tends to increase as companies lay off workers due to reduced demand for goods and services. The natural rate of unemployment represents the long-term, non-cyclical unemployment rate that occurs due to frictional and structural factors in the economy and is less likely to change rapidly over such a short period.