4. An increase in productivity will likely causedownward, and have an ambiguous effect on the_(AS / AD) curve to shift_(AS / AD) curve.5. Suppose an economy is characterized by the equations below:Price setting: P= (1+ m \w /A)Wage setting: W = A°P*(1– u)Write down an expression for the equilibrium unemployment rate if P* = P but A does notnecessarily equal A.Now suppose that expectations of both prices and productivity are accurate. If the markup (m)is equal to 5%, the natural rate of unemployment is

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Answered: 4. An increase in productivity will…

4. An increase in productivity will likely cause downward, and have an ambiguous effect on the (AS / AD) curve to shift (AS / AD) curve.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. An increase in productivity will likely cause
downward, and have an ambiguous effect on the
_(AS / AD) curve to shift
_(AS / AD) curve.
5. Suppose an economy is characterized by the equations below:
Price setting: P= (1+ m \w /A)
Wage setting: W = A°P*(1– u)
Write down an expression for the equilibrium unemployment rate if P* = P but A does not
necessarily equal A.
Now suppose that expectations of both prices and productivity are accurate. If the markup (m)
is equal to 5%, the natural rate of unemployment is

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