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If Okun's Law Is U - Un = - 0

Question 69

Multiple Choice

If Okun's law is U - Un = - 0.5 (Y - YP) , and potential output grows at 2% per year, then a recession that causes output to decrease by one percentage point will cause unemployment to increase by ________.


A) 1 percentage point
B) 1.5 percentage points
C) 2 percentage points
D) 3 percentage points
E) one-half percentage point

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