{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

MacroeconomicsChapter 6select

# MacroeconomicsChapter 6select - ANSWERS TO END-OF-CHAPTER...

This preview shows pages 1–2. Sign up to view the full content.

ANSWERS TO END-OF-CHAPTER PROBLEMS CHAPTER 6 Quick Check 1. d. True. e. False. f. Uncertain/False. The degree of bargaining power depends on the nature of the job and the employee’s skills. g. True. h. False. 3. a. W/P=1/(1+ μ )=1/1.05=.952 b. Wage setting: u=1-W/P=4.8% c. W/P=1/1.1=.91; u=1-.91=9%. The increase in the markup lowers the real wage. Algebraically, from the wage-setting equation, the unemployment rate must rise for the real wage to fall. So the natural rate increases. Intuitively, an increase in the markup implies more market power for firms, and therefore less production, since firms will use their market power to increase the price of goods by reducing supply. Less production implies less demand for labor, so the natural rate rises. Dig Deeper 4. a. Answers will vary. b-c. Most likely, the difference between your actual wage and your reservation wage will be higher for the job you will have ten years later. d.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

MacroeconomicsChapter 6select - ANSWERS TO END-OF-CHAPTER...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online