The version of Okun's law discussed in class implies that with no change in unemployment, real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's law predicts that real GDP would: increase by 1 percent decrease by 4 percent

The version of Okun's law discussed in class implies that with no change in unemployment, real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's law predicts that real GDP would: increase by 1 percent decrease by 4 percent

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Pleasehighlight which of the choices is the correct answer for each and if you can please explian why

The version of Okun's law discussed in class implies that with no change in unemployment,
real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's
law predicts that real GDP would:
increase by 1 percent
decrease by 4 percent
decrease by 2 percent
decrease by 1 percent

Because the long-run aggregate supply curve is vertical, changes in aggregate demand (in the
long-run) affect
both prices and the level of output
neither prices nor the level of output
level of output but not prices
prices but not level of output

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