Frictional unemployment is often thought to explain relatively short spells of unemployment

Suppose potential GDP is $100 billion and the natural unemployment rate is 5 percent. If the unemployment rate is 6 percent, then according to Okun's Law real GDP is

A) $102 billion. B) $98 billion. C) $101 billion. D) $99 billion. E) $100 billion.

Refer to Figure 3.2. At any consumption bundle with the quantity of good X exceeding the quantity of good Y (that is, a bundle located below the 45 degree line, like point A), Alvin's marginal rate of substitution of good X for good Y is

A) diminishing. B) positive. C) constant and positive. D) zero.