3. Suppose that the markup of goods prices over costs is 10%, and that the wage setting equation is W = P (1-u), where u is the unemployment rate. a. Find the natural rate of unemployment. b. There is no guarantee that the expected price level equals the actual price level in the short run. If the expected price level is higher than the actual price level, what will happen to the unemployment rate? Explain.
3. Suppose that the markup of goods prices over costs is 10%, and that the wage setting equation is W = P (1-u), where u is the unemployment rate. a. Find the natural rate of unemployment. b. There is no guarantee that the expected price level equals the actual price level in the short run. If the expected price level is higher than the actual price level, what will happen to the unemployment rate? Explain.
Chapter10: Aggregate Supply
Section: Chapter Questions
Problem 1.1P
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Could you help me with my macroeconomics question? Thanks :)
![3. Suppose that the markup of goods prices over costs is 10%, and that the wage setting
equation is W = P² (1-u), where u is the unemployment rate.
a. Find the natural rate of unemployment.
b.
There is no guarantee that the expected price level equals the actual price level in
the short run. If the expected price level is higher than the actual price level, what
will happen to the unemployment rate? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F57b6772e-3ad3-4772-ab9c-658861adf343%2Fdfc745bd-394a-496e-8573-a2fac93939dd%2F1lka12co_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. Suppose that the markup of goods prices over costs is 10%, and that the wage setting
equation is W = P² (1-u), where u is the unemployment rate.
a. Find the natural rate of unemployment.
b.
There is no guarantee that the expected price level equals the actual price level in
the short run. If the expected price level is higher than the actual price level, what
will happen to the unemployment rate? Explain.
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