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 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.