Question: 4. Consider the DMP search model that we discussed in class. (a) (6 points) Explain how this model generates a downward-sloping Beveridge curve. Use equations

4. Consider the DMP search model that we discussed in class.

4. Consider the DMP search model that we discussed in class. (a) (6 points) Explain how this model generates a downward-sloping Beveridge curve. Use equations and provide the intuition. (b) (14 points) Show how this model can explain an outward shift in the Beveridge curve. Then, use the two graphs we discussed in class (demand-side and supply-side graphs) to explain how that shift in the Beveridge curve affects wage, labor market tightness, the unemployment rate, the vacancy rate, the labor force, and aggregate output. Explain the intuition for each step

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