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12 June, 12:13

Higher rates of real per capita gross domestic product (GDP) are negatively correlated with:

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  1. 12 June, 12:34
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    unemployment

    Explanation:

    Okun' law is an association that describes unemployment in a country based on the observation of a decline in Real GDP in the country. According to the interval and related model, every 1% increase in unemployment leads to a 2% deviation from the country's GDP potential. The difference model explains the relationship between unemployment and real GDP changes in the quarters. The law was named Arthur Okun in 1962, recognizing these relations. Arthur Okun, who examines the growth Real GDP and unemployment figures of the American economy, has found that unemployment rates have declined in those years when the real growth rate is high, and, on the contrary, the rise in unemployment rates has been low or even negative. This means the negative correlation between them. Arthur Okun's statement of the link between real growth and unemployment in a formula has led to this idea being later called Okun's law. Okun's law is that when real growth rates exceed 2.25%, increasing real incomes by more than 2.25% will result in a 0.5% drop in unemployment. For example, in a year when national income increased by 5.25%, unemployment declined by 1.5% (5.25% to 2.25% = 3% and 3% / 2% = 1.5%).
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