The Version of Okun's Law Studied in Chapter 10 Assumes

Multiple Choice

The version of Okun's law studied in Chapter 10 assumes that with no change in unemployment, real GDP normally grows by 3 percent over a year. If the unemployment rate rose by 2 percentage points over a year, Okun's law predicts that real GDP would:

A) decrease by 1 percent.
B) decrease by 2 percent.
C) decrease by 3 percent.
D) increase by 1 percent.