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Assume That the Natural Rate of Unemployment Is 7

Question 16

Multiple Choice

Assume that the natural rate of unemployment is 7%. Further assume that the growth of potential GDP is zero. If GDP gap is minus 6%, then according to Okun's Law:


A) the unemployment rate is 13%.
B) the unemployment rate is 10%.
C) the unemployment rate is 7%.
D) the unemployment rate is 3%.

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