Suppose that the markup of goods prices over marginal cost is 5%, and that the wage-setting...
Suppose that the markup of goods prices over marginal cost is 5%, and the wage-setting equation isW = P(1-u)where u is the unemployment rate.The real wage, as determined by the price-setting equation is _______.The natural rate of unemployment is _______%.
The natural rate of unemployment Suppose that the markup of the prices of products over wage cost, z, is 10%, and that the wage-setting equation is W = P*(1 - 2m + z) where m is the unemployment rate and z is the unemployment benefit/minimum wage. a. What is the real wage, as determined by the price-setting equation? b. Solve for the natural rate of unemployment c. What happens to the natural rate of unemployment if z falls from 10%...
Suppose that the firms' markup over cost is initially 10% and that the wage determination equation when Pe=P is W = P(1-u) where u = unemployment rate (assume for simplicity, that the catch-all variable z does not enter wage setting). Now suppose that there is a permanent increase in the oil price that increases the markup to 15%. Keeping all else constant, what is the absolute change in the natural level of unemployment (i.e. Un2- Un1 = ?) ? (please...
Question 2 (5 marks) The wage setting relation W = PF(u, z) developed in lectures and in Blanchard, for the situation where P = Pe can be drawn in real wage/unemployment space as follows: W/P WS (Wage setting relation) u (a) (b) Explain why an increase in the unemployment rate would be associated with a lower real wage rate. Explain what effect an increase in the unemployment benefit rate would have on this wage setting relation Explain the effect an...
Question 2 (5 marks) The wage setting relation W PE(u, z) developed in lectures and in Blanchard, for the situation where P=P®, can be drawn in real wage/unemployment space as follows: W/P WS (Wage setting relation) u (a) (b) Explain why an increase in the unemployment rate would be associated with a lower real wage rate. Explain what effect an increase in the unemployment benefit rate would have on this wage setting relation. Explain the effect an increase in firms'...
Please help with C and D. Thank You. 1. (4 points) Suppose that the markup of goods over unit costs is 20% and that that the wage-setting equation is W = P(1 - u), where u is the unemployment rate. a. What is the real wage, as determined by the price-setting equation? b. What is the natural rate of unemployment? c. Suppose that the markup of prices over costs increases to 25%. What happens to the natural rate of unemployment?...
Suppose that the firms' markup over cost is 10% and that the wage determination equation when Pe=P is W = P(1-u) where u = unemployment rate (assume for simplicity, that the catch-all variable z does not enter wage setting). What is the natural rate of unemployment? (please answer in the form 0.xxxx (which 4 digital places), e.g. 0.1234 representing 12.34%)
Question 2 (5 marks) The wage setting relation W = PF(u, z) developed in lectures and in Blanchard, for the situation where P=pe, can be drawn in real wage/unemployment space as follows:- W/P Į Į Į Į I Į I WS (Wage setting relation) ue (a) (b) Explain why an increase in the unemployment rate would be associated with a lower real wage rate. Explain what effect an increase in the unemployment benefit rate would have on this wage setting...
. Question 2 (5 marks) The wage setting relation W = PECU. z) developed in lectures and in Blanchard, for the situation where P=pe, can be drawn in real wage/unemployment space as follows: t t W/P WS (Wage setting relation) t + (a) (b) Explain why an increase in the unemployment rate would be associated with a lower real wage rate. Explain what effect an increase in the unemployment benefit rate would have on this wage setting relation. Explain the...
macroeconomics. I just need the correct option. Wage setting: W = Pº(1 – u) Price setting: P =W(1 + p) Suppose that the markup of prices over cost is 7%. What is the natural rate of unemployment? A-) 6.5% B-) 6% C-) 3.5% D-) 2% E-) 396 SORU-21 9 YTÜ Online Kampis Get Homework Help