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Unformatted text preview: A. P > P e . B. P < P e . C. P = P e . 6. The natural level of output A. is fixed. B. can change. C. has increased over time. 7. An increase in the markup of prices over costs ____ the natural rate of unemployment. A. decreases. B. increases. C. does not change. D. equals. 8. Explain your answer to question 7. In your explanation, draw a graph with clearly-labeled curves and axes, and explain why and how a curve or curves shift in your graph. Answer keys 1. A 2. B 3. B 4. E 5. C 6. B 7. B. 8. An increase in markups shifts the PS curve downwards, but the WS curve stays the same. Thus, the natural rate of unemployment increases....
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This note was uploaded on 09/29/2010 for the course ECON 110A taught by Professor Laboskey during the Summer '08 term at Alabama.
- Summer '08