Discussion
According to Okun's law, 1 extra point of unemployment costs ......... percent of GDP.
Answer: A
The answer is 2% of GDP.
Okun's law relates unemployment to lost output: in its standard textbook form, each percentage point of unemployment above the natural rate is associated with about 2% of GDP below potential. Okun's own 1962 estimate for the United States was closer to 3%, but the 2% rule of thumb is the one used in modern macroeconomics texts and the key follows it.
6% and 1% are not associated with the law.
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