Suppose that the productivity of labor increased. Predict what would happen to the equilibrium real wage and the equilibrium quantity of labor. What happens to unemployment (relative to the natural rate)?Suppose that the productivity of labor fell and that real wages were fixed (at least in short-run). Predict what would happen to equilibrium real wage, the equilibrium quantity of labor, and unemployment rate (relative to the natural rate).

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Answered: Suppose that the productivity of labor…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter12: Business Cycles And Unemployment

Section: Chapter Questions

Problem 8SQP

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Suppose that the productivity of labor increased. Predict what would happen to the equilibrium real wage and the equilibrium quantity of labor. What happens to unemployment (relative to the natural rate)?
Suppose that the productivity of labor fell and that real wages were fixed (at least in short-run). Predict what would happen to equilibrium real wage, the equilibrium quantity of labor, and unemployment rate (relative to the natural rate).

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