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Author Question: Suppose an economy is characterized by the equations below: Price setting: P= (1 + m) (W/ A)Wage ... (Read 41 times)

theo

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on: Jun 30, 2018
Suppose an economy is characterized by the equations below: Price setting: P= (1 + m) (W/
 
  A)Wage setting: W=AP(1 - u)Solve for the natural rate of unemployment if the markup (m) is equal to 4.

Question 2

Which of the following is a component of high powered money?
 
  A) bonds held by banks, loans, and bank reserves
  B) currency in circulation plus bank reserves
  C) currency in circulation plus checkable deposits
  D) bonds held by banks plus checkable deposits
  E) the sum of currency in circulation, bank reserves, and checkable deposits


ashely1112

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Reply #1 on: Jun 30, 2018
Answer to Question 1

u = 4

Answer to Question 2

B


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