Suppose the markup of goods prices over marginal cost is 20% and the wage-setting equation is W=P(i-u)

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Suppose the markup of goods prices over marginal cost is 20% and the wage-setting equation is W=P(i-u) with u being the unemployment rate.

a. What is the Natural level on Unemployment?

b. What is the real wage as determined by the price setting equation?

c. If the markup decreases to 10%, what happens to the natural rate of employment? EXPLAIN.

Related Book For answer-question

Macroeconomics

ISBN: 978-0138014919

12th edition

Authors: Robert J Gordon

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Posted Date: Apr 30, 2019 09:02 AM

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Suppose the markup of goods prices over marginal cost is 20% and the wage-setting equation is W=P(i-u)

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a We have been given markup prices over marginal cost is 20 The wage setting equation has ... View the full answer

Macroeconomics

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