According to Okun's law, if the unemployment rate goes from 6% to 2%. what will be the effect on the GDP?
A. It will decrease by 11%
B. It will increase by 5%
C. It will increase by 11%
D. it will decrease by 5%
Never heard of this but....the law says that : In the short run, the unemployment rate decreases about 1 percentage point for every 3 percent increase in real GDP
So....it seems that if the unemployment rate decreases by 4 %.....then the GDP should rise by 4(3%) = 12%
So....I suppose that "C" comes closest