economics medium MCQ

Okun's Law establishes an empirical relationship between which two macroeconomic variables?

  1. Inflation and Interest Rates
  2. Tax Rates and Tax Revenue
  3. GDP Growth and Unemployment
  4. Money Supply and Price Level

Answer: GDP Growth and Unemployment

Proposed by Arthur Okun, this law states that for every 1% increase in the unemployment rate, a country's GDP will be roughly 2% lower than its potential GDP. It highlights the severe economic cost of joblessness in terms of lost national output.

Topic Macroeconomics - Curves
Exam Relevance UPSC Prelims, SSC CGL
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