Author Question: The natural rate of output is ________. A) independent of the inflation rate B) always lower ... (Read 89 times)

Bernana · **on:** Jun 30, 2018

The natural rate of output is ________.

A) independent of the inflation rate
B) always lower than potential output
C) unrelated to the natural rate of unemployment
D) all of the above
E) none of the above

Question 2

Is there a positive or negative relationship between real wages and output in the classical model? Explain.

What will be an ideal response?

nanny · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

The answer depends upon whether labor supply or labor demand is shifting. If an increase in output is caused by an increase in labor supply, then there is a negative relationship between real wages and output. If an increase in labor demand causes the increase in output, then real wages and output are positively related.