If the Natural Unemployment Rate Is 4 Percent and Potential

Multiple Choice

If the natural unemployment rate is 4 percent and potential GDP is $30 billion, then according to Okun's law, when the unemployment rate falls to 3 percent, real GDP

A) decreases to $29.4 billion.
B) remains constant at $30 billion.
C) first decreases by 4 percent and then increases by 4 percent.
D) increases to $30.6 billion.
E) increases to $60 billion.