Suppose an economy's real output in 2015 was 10 percent below its maximum potential output while in the next year it was only 5 percent less. If net investment was positive and the size of the labour force also increased, then one can say that the increase in output in 2016 over that in 2015 was
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Inflation, unemployment and the Phillips curve has come up 106 times in 7 exams since 2006.
This question is on Okun's law and the output gap, part of Inflation, unemployment and the Phillips curve in Macroeconomics.
The link between output growth and unemployment, and the gap between actual and potential output.
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Question from the JNU SSS 2017 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.