The version of Okun's law discussed in class implies that with no change in unemployment, real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's law predicts that real GDP would: increase by 1 percent decrease by 4 percent

The version of Okun's law discussed in class implies that with no change in unemployment, real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's law predicts that real GDP would: increase by 1 percent decrease by 4 percent

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter23: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 7QR

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Question

Pleasehighlight which of the choices is the correct answer for each and if you can please explian why

The version of Okun's law discussed in class implies that with no change in unemployment,
real GDP growth is 3 percent. If the unemployment rate rose by 2 percentage points, Okun's
law predicts that real GDP would:
increase by 1 percent
decrease by 4 percent
decrease by 2 percent
decrease by 1 percent

Because the long-run aggregate supply curve is vertical, changes in aggregate demand (in the
long-run) affect
both prices and the level of output
neither prices nor the level of output
level of output but not prices
prices but not level of output

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