Question : 31) According to Okun’s Law, for each 1 percentage point : 1240618

31) According to Okun’s Law, for each 1 percentage point that the unemployment rate is above the natural unemployment rate, then

A) the inflation rate is less than the expected inflation rate by 1 percentage point.

B) real GDP is below potential GDP by 2 percent.

C) real GDP is above potential GDP by 2 percent.

D) the inflation rate is greater than the expected inflation rate by 2 percentage points.

E) the real interest rate is below the natural real interest rate by 1 percentage point.

32) Okun’s Law states that for each percentage point that the unemployment rate is above its natural rate, there is a ________ percent gap between real GDP and potential GDP.

A) 2

B) 4

C) 6

D) 8

E) random

33) If the natural unemployment rate is 5 percent and the actual unemployment is 3 percent, then Okun’s Law concludes that real GDP is

A) 2 percent greater than potential GDP.

B) 4 percent greater than potential GDP.

C) 2 percent less than potential GDP.

D) 4 percent less than potential GDP.

E) 3 percent greater than potential GDP.

34) According to Okun’s Law, if the unemployment rate is 7 percent and the natural unemployment rate is 5 percent, potential GDP is ________ than real GDP.

A) 2 percent less

B) 4 percent less

C) 7 percent less

D) 2 percent greater

E) 4 percent greater

35) Suppose the natural unemployment rate is 5 percent, the actual unemployment rate is 6 percent, and potential GDP is $5,000 billion. Based on Okun’s Law, real GDP is equal to ________ billion.

A) $5,000

B) $5,100

C) $4,900

D) $4,000

E) $5,900

36) If the natural unemployment rate is 5 percent, the actual unemployment rate is 8 percent, and potential GDP is $15 trillion, then according to Okun’s Law, real GDP is

A) $14.25 trillion.

B) $14.1 trillion.

C) $13.8 trillion.

D) $13.05 trillion.

E) $15.9 trillion.

37) If the natural unemployment rate is 4 percent and potential GDP is $30 billion, then according to Okun’s Law, when the unemployment rate falls to 3 percent, real GDP

A) decreases to $29.4 billion.

B) remains constant at $30 billion.

C) first decreases by 4 percent and then increases by 4 percent.

D) increases to $30.6 billion.

E) increases to $60 billion.

38) Suppose the unemployment rate is 8 percent and the natural unemployment rate is 6 percent. If potential GDP is $8 trillion, using Okun’s Law what does real GDP equal?

A) $7.68 trillion

B) $8.32 trillion

C) $7.84 trillion

D) $8.16 trillion

E) $8.00 trillion

39) According to Okun’s Law, when the natural employment rate is 6 percent and potential GDP is $10 trillion, then when actual employment is 7 percent, real GDP is

A) $10.2 trillion.

B) $9.8 trillion.

C) $9.9 trillion.

D) $10.1 trillion.

E) $8 trillion.

40) According to Okun’s Law, when the natural employment rate is 6 percent and potential GDP is $10 trillion, then when actual employment is 5 percent, real GDP is

A) $10.2 trillion.

B) $9.8 trillion.

C) $9.9 trillion.

D) $10.1 trillion.

E) $8 trillion.