Macroeconomics (9th Edition)
Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
Question
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Chapter 11, Problem 5NP

a.

To determine

To derive: The equation that provides a relation between the real wage and the amount of labor demanded by the firms.

b.

To determine

For the nominal wage of 20, derive the relation between price level and the amount of labor demanded by firms.

c.

To determine

To describe: The relationship between price level and the amount of output supplied by the firms and put it on the graph.

Supposing that the IS and LM curves of the economy (the goods market and the asset market equilibrium conditions) are described by following equations:

  IS curve, Y=120-500rLM curve, MP=0.5Y500r

e.

To determine

To derive: The relationship between output, Y and P. Graph it on the same axis as the relationship between the price level and the amount of output supplied by firms, the aggregate supply curve, from part (c).

e.

To determine

To derive: The equilibrium values of price level, output, real wage, real interest rate, and employment.

f.

To determine

To describe: The equilibrium values of price level, output, employment, real wage and real interest rate if M is 135.

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