For parts (a) and (b) assume that the following information applies to an economy: • the nominal wage rate in the economy is $24 per hour ⚫ the aggregate price level is $8.⚫ there is a 90% employment rate. (b) Using a wage-setting curve, show the effect of a 50% reduction in the aggregate price level on the unemployment rate in the economy. On your diagram you will also need to indicate the total labour force for the economy (ESSAY FORM PLEASE THANKS)

For parts (a) and (b) assume that the following information applies to an economy: • the nominal wage rate in the economy is $24 per hour ⚫ the aggregate price level is $8.⚫ there is a 90% employment rate. (b) Using a wage-setting curve, show the effect of a 50% reduction in the aggregate price level on the unemployment rate in the economy. On your diagram you will also need to indicate the total labour force for the economy (ESSAY FORM PLEASE THANKS)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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My answer is 3.9 but actual answer is 4.35% please provide calculation!!!
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Consider the labour market represented in the following graph: real wage W P equilibrium employment WS PS Employment rate Where WS represents the Wage Setting relationship, and PS represents the Price Setting relationship. Which of the following statements are INCORRECT? Changes in the marginal product of labour will change the equilibrium level of unemployment because it makes the wage setting (WS) curve shift. A non-labour related increase in cost of production, will shift the PS curve downwards. The PS curve is horizontal because changes in prices do not affect the rate employment in the economy. A positive demand shock that increases actual output will move the equilibrium employment to the right of the point E in the graph.
In a country called Uncle Sam Land (USL), the labor demand curve is given by:W = K- 4LWhere W is the wage rate, K is a variabledetermined by accumulated capital stock in thecountry, and L is the labor force in the country.K= 50 is supplied by the capitalists.If the labor force in this country goes up from 10 to 11, what happens to the national income in USL?National Income = income of all workers + income of all capitalists.Select one:a. Does not changeb. Goes down by 44c. Goes up by 8d. Goes up by 26e. None of the above.
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