If the natural unemployment rate is 5 percent and the actual ...

[pepyto]

If the natural unemployment rate is 5 percent and the actual unemployment is 3 percent, then Okun's Law concludes that real GDP is
 
  A) 2 percent greater than potential GDP.
  B) 4 percent less than potential GDP.
  C) 3 percent greater than potential GDP.
  D) 4 percent greater than potential GDP.
  E) 2 percent less than potential GDP.

Question 2

Suppose that there is an increase in disposable income and simultaneously an increase in the expected profitability of investment. As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.
 
  A) remains unchanged; increases
  B) rises; increases
  C) might rise, fall, or remain unchanged; increases
  D) falls; increases
  E) might rise, fall, or remain unchanged; decreases

[lkoler]

Answer to Question 1

D

Answer to Question 2

C