Graphically Illustrate (Using the WS and PS Relations)and Explain the Effects

question 43

Essay

Graphically illustrate (using the WS and PS relations)and explain the effects of a reduction in the markup on the equilibrium real wage,the natural rate of unemployment,the natural level of employment,and the natural level of output.

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Definitions:

Drive Reduction Theory

A theory of motivation that posits individuals are motivated to take actions in order to reduce the internal tension caused by unmet needs.

Homeostasis

The tendency of a biological system to maintain stable internal conditions despite external changes.

Homeostasis

The tendency of a biological system to maintain stability while adjusting to conditions that are optimal for survival.

Yerkes-Dodson Law

A theory suggesting there is an optimal level of arousal for the best performance of a task; too little or too much arousal can negatively affect task performance.