The Version of Okun's Law Studied in Chapter 9 Assumes

Multiple Choice

The version of Okun's law studied in Chapter 9 assumes that, with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate fell by 1 percentage point over a year, Okun's law predicts that real GDP would:

A) decrease by 1 percent.
B) decrease by 2 percent.
C) increase by 4 percent.
D) increase by 5 percent.