Question

4) Okun's law states that one extra percentage point in unemployment causes A) a 2 percent fall in GDP B) a 0.5 percent fall in GDP C) a 2 percent fall in the rate of inflation D) a 0.5 percent fall in the rate of inflation

5) If output is at its full-employment level, then A) the actual unemployment rate is zero B) the natural rate of unemployment is zero C) there are no frictions in the labor market since wages have reached their market-clearing level D) there is still some positive level of unemployment due to frictions in the labor market

6) The income velocity of money can be calculated using the following formula A) V = M/(PY) B) V = (MY)/P C) V = (PY)/M D) V = MY

Answer 1