Assume expectations of prices are correct but expectations of productivity adjust slowly. Use the PS/WS relations, graphically illustrate and explain the effects of a decrease in productivity growth on the natural rate of unemployment
What will be an ideal response?
The PS relation shifts up by a factor A. The WS relation shifts up by a factor Ae. If Ae>A, the PS curve shifts up by less than the WS relation shifts up, leading to an increase in the natural rate of unemployment for some time.
Economics
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A decrease in the cost of production will shift the supply curve down and to the right
Indicate whether the statement is true or false
Economics
"The change in the value of the variable measured on the y-axis divided by the change in the value of the variable measured on the x-axis" is the definition of
A) a trend. B) a graph. C) a relationshi
Economics