Okun's law shows that when the unemployment rate is above the natural rate, output is below potential.
What does Okun's law show?
- Okun's Law states that there is a causal link between unemployment and output losses in a nation.It asserts that a 1% rise in unemployment will typically be accompanied by a 2% decline in GDP (GDP).
- Okun's Law: Okun's law describes the correlation between rising unemployment and falling gross domestic product in a nation (GDP) .It claims that GDP will fall between two and four percent short of its potential for every one percent increase in unemployment over a "natural" level.
- A lower than natural rate of unemployment indicates that the economy is expanding faster than it can maintain, which puts upward pressure on wages and prices in general and raises inflation.
To learn more about Okun's law refer
https://brainly.com/question/14532292
#SPJ4
