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.
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