This topic contains a solution. Click here to go to the answer

Author Question: Explain what effect a reduction in productivity has on wage setting behavior, price setting ... (Read 279 times)

pepyto

  • Hero Member
  • *****
  • Posts: 547
Explain what effect a reduction in productivity has on wage setting behavior, price setting behavior, the equilibrium real wage, the natural rate of unemployment, and the natural level of output.
 
  What will be an ideal response?

Question 2

Suppose a one-year discount bond offers to pay 100 in one year and currently sells for 99. Given this information, we know that the interest rate on the bond is
 
  A) 11.1.
  B) 10.
  C) 5.3.
  D) 9.9.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

dmurph1496

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

A reduction in A will cause a reduction in the real wage based on WS behavior; therefore, the WS curve shifts down by the change in A. The reduction in A increases the marginal cost of an additional unit of output so firms will raise the price. Hence, the real wage based on PS behavior will fall by A and the PS curve shifts down by A. Given the size of the shifts in the WS and PS curves, u does not change; however, the real wage does fall.

Answer to Question 2

A




pepyto

  • Member
  • Posts: 547
Reply 2 on: Jun 30, 2018
Excellent


kusterl

  • Member
  • Posts: 315
Reply 3 on: Yesterday
Great answer, keep it coming :)

 

Did you know?

Asthma cases in Americans are about 75% higher today than they were in 1980.

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

Inotropic therapy does not have a role in the treatment of most heart failure patients. These drugs can make patients feel and function better but usually do not lengthen the predicted length of their lives.

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

For a complete list of videos, visit our video library