Question: 2 Chapter 11, page 440 in the #th edition, Numerical Problem S, which is the same as Numerical Problem S on page 435 in the

2 Chapter 11, page 440 in the #th edition, Numerical Problem

2 Chapter 11, page 440 in the #th edition, Numerical Problem S, which is the same as Numerical Problem S on page 435 in the Sch edition. 5. (Appendix 11.A) Conalder an Economy In which all workers are covered by contracts that specify the nomis nal wage and give the employer the right to choose the amount of employment. The production function is Y - 20VN. and the corresponding marginal product of labor is MPN - 10 VN Suppose that the nominal wage is W = 20 if. Derive an equation that relates the real wage to the amount of labor demanded by firms (the labor demand curve) For the nominal wage of 20, what is the relation- ship between the price level and the amount of labor demanded by firms? What is the relationship between the price level and the amount of output supplied by firmat Graph this relationship. Now suppose that the 15 and LM curves of the soonomy (the goods market and asset market equi- librium conditions) are described by the following 14 curve Y - Im - 50Or IM curve M/P - DAY - WHY. d. The money supply M $ 300. Use the IS and LM equations to derive a relationship between output Y, and the price level, F. This relationship is the Equation for the approgato demand curve. Graph it on the same axis as the relationship between the price level and the amount of output supplied by firms (the apprepale supply curve) from Part tok What are the equilibrium values of the price level output, employment, real wage, and real interest rate? f. Suppose that the money supply, M, is 135. What are the equilibrium values of the price level, out- put, employment, real wage, and mal intencel mile

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