The concept of 'Okun's Law' relates: MCQ with Answer and Explanation

The concept of 'Okun's Law' relates:
A. Interest rates and investment
B. Unemployment and the gap between actual and potential output
C. Unemployment and inflation
D. Money supply and price level
Answer: Option B
Solution (By JKSSB Mock Tests)
Okun's Law describes the empirical relationship between unemployment and the output gap: a rise in unemployment is associated with a fall in actual output relative to potential output.

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Practice More Economy Set 1 Questions

Question #1
Which of the following is a characteristic of a dual economy?
A. Absence of informal activities
B. Coexistence of a modern industrial sector and a traditional agricultural sector
C. Only service sector dominance
D. Uniform productivity across sectors

Correct Answer: Option B


Explanation:
Dualism refers to the simultaneous existence of a modern, high-productivity sector and a traditional, low-productivity sector within the same economy.

This question belongs to: Economy GK Economy Set 1
Question #2
The 'Fisher effect' suggests that if expected inflation rises by 1%, nominal interest rates:
A. remain unchanged
B. fall by 1%
C. fall by more than 1%
D. rise by about 1%

Correct Answer: Option D


Explanation:
The Fisher effect indicates nominal interest rates rise with expected inflation one-for-one in the long run.

This question belongs to: Economy GK Economy Set 1
Question #3
Which of the following is a feature of the 'Job Guarantee' proposal?
A. A public programme that offers employment at a living wage to anyone willing and able to work
B. Only training programmes without employment
C. Only private-sector job creation without public involvement
D. Only unemployment insurance without job offers

Correct Answer: Option A


Explanation:
A job-guarantee programme commits the public sector to provide a job at a basic living wage to every person who wants one, thereby eliminating involuntary unemployment and establishing an effective wage floor.

This question belongs to: Economy GK Economy Set 1