Intermediate macroeconomic

4. Suppose there is an increase in total factor productivity, which implies that all firms offerhigher wages. In the one-sided search model of unemployment, determine the effects of this on the reservation wage and on the long-run unemployment rate. Explain your results. 5. Suppose the government's goal is to reduce the unemployment rate. Some legislators proposethat the government should give a subsidy s to any firm that hires a worker. Others argue that it would be more effective to simply pay consumers to stay at home rather than search for work; that is, anyone who chooses not to participate in the labour force should receive a payment q. Which policy is more effective in achieving the government's goal? Explain using the two-sided search model, with the aid of diagrams. (In your answer, do not concern yourself with how the subsidies from the government are financed.) 6. Suppose that all social programs simultaneously become more generous. In particular, supposethat there is an increase in EI benefits and also an increase in welfare benefits, which are represented in the two-sided search model as payments to everyone who is not in the labour force. What will be the effects on the unemployment rate, the vacancy rate, the labour force, the number of firms, aggregate output, and labour market tightness? Explain your results