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According to okun’s law, how much output (real gdp) was lost in 2009 when the nation’s unemployment rate increased from 5.8 percent to 9.3 percent? (real gdp in 2009 was $14,419 billion).

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Answer: Decline in GDP = $1009.3 billion

Explanation:

Okun's law shows us the relationship between a nation's unemployment rate and its level of output or real GDP.

According to the Okun's law,

[tex]Loss in GDP=  2* (9.3 - 5.8) = 7%[/tex]

Therefore, a 7% decline in GDP as compared to the level in 2009 means,

[tex]Change in GDP = -0.07 * 14419 billion[/tex]

= 1009.33 billion or 1009.3 billion

Thus, GDP declined by $1009.3 billion.

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