Some economists believe that the severity of the 20072009 recessions may have permanently changed Okuns Law. Okuns

Question:

Some economists believe that the severity of the 2007–2009 recessions may have permanently changed Okun’s Law. Okun’s law states that as real GDP increases by 1 percentage point relative to potential GDP, cyclical unemployment decreases by 0.5 percentage point. How might the recession have changed this relationship? Briefly explain.