Okun's Law is an empirical relationship that shows how changes in unemployment rates are associated with changes in a nation's output, specifically its GDP. It generally states that for every 1% increase in the unemployment rate above the natural rate, a country's GDP will be roughly an additional 2% lower than its potential GDP. This concept is crucial for understanding the interplay between unemployment types and the natural rate, illustrating how economic performance is affected by labor market dynamics.
congrats on reading the definition of Okun's Law. now let's actually learn it.