According to ________, when real GDP is ________ percentage points greater than potential GDP, the unemployment rate is one percentage point ________ the natural unemployment rate.
A) Okun's Law; four; below
B) Keynes' Law; two; below
C) Phillip's Law; four; above
D) Say's Law; two; above
E) Okun's Law; two; below
Question 2
The figure above shows the loanable funds market. If the real interest rate is 10 percent, then
A) there is a shortage in the loanable funds market.
B) the government must intervene in order to prevent a credit crisis.
C) the interest rate must increase.
D) savers will exit the market because of the high opportunity cost of saving.
E) there is a surplus in the loanable funds market.
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Complete the following production chart and plot the points.
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