In macroeconomics, what does Okun's law describe?
Answer and explanation
Correct answer: C. The empirical inverse relationship between unemployment and Gross Domestic Product growth
- Step 1: Okun's law posits that for every percentage point an economy's GDP falls below potential output, the unemployment rate rises by roughly half a percentage point. Answer: The empirical inverse relationship between unemployment and Gross Domestic Product growth. Why not the others: Taxes and investment, bank rates and gold, and shipping and inflation do not constitute Okun's law.
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