question archive The production function is assumed to be Y=N
The production function is assumed to be Y=N
Subject:BusinessPrice: Bought3
The production function is assumed to be Y=N. Let z represent all other factors that affect the wage determination. (1) Suppose that the equilibrium real wage increases from 0.75 to 0.8. This implies that the mark-up changes from to (2 points), holding a constant. (2) How will the change in markup affect the natural rate of unemployment and natural level of output (2 points)? 10 (3) How will the output, unemployment rate, and price level change in the short run AND in the medium run (6 points)? Please use AD-AS framework to demonstrate your answers, assuming that initially the short-run equilibrium output is equal to the natural rate of output (5 points). Clearly label each curve and indicate how each of them shifts.
