Relationship between GDP, Inflation and Unemployment
Creation of employment opportunities depends on the volume and composition of economic activity in the economy, that is, the total output of goods and services in the economy (Gross Domestic Product (GDP)) and its structure. Factors that affect this basic relationship are:
- Availability of capital
- Availability of skills and expertise among the employed persons and
- The manner in which capital and labour combine to produce the output of goods and services
Okun’s Law
Okun’s law proposed by Arthur Melvin Okun states that there is an inverse relationship between cyclical output growth and unemployment and the extent of it depends onlabor force participation ....
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