For this question, assume productivity has been increasing by 5 ...

[Chelseaamend]

For this question, assume productivity has been increasing by 5 per year. Also assume that workers' expectations of productivity growth adjust slowly over time. For this economy, a reduction in productivity growth from 5 to 2 will most likely cause which of the following to occur?
 
  A) an increase in the natural rate of unemployment
  B) a reduction in the real wage
  C) an increase in the markup over labor costs
  D) all of the above
  E) none of the above

Question 2

Suppose the consumption equation is represented by the following: C = 250 + .75YD, then private savings is
 
  A) -250+0.25YD.
  B) -250+0.75YD.
  C) -1000+0.25YD.
  D) -1000+0.75YD.

[nhea]

Answer to Question 1

A

Answer to Question 2

A