Using the WS-PS model, graphically explain the effects of a reduction in the markup on the...

Question

Question

Using the WS-PS model, graphically explain the effects of a reduction in the markup on the equilibrium real wage, the natural

Answer 1

Answer #1

1. Decrease. Reduction in the mark up will cause a decrease in the price level.

2. Increase.

3. Upward

4. Price Setting Curve

5. Decrease

6. Increases

7. Increases because employment rate has increased.

Answer 2

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