For This Question,assume That Expectations of Productivity Are Slow to Adjust.Further

question 52

Multiple Choice

For this question,assume that expectations of productivity are slow to adjust.Further assume that A had been increasing by 2% a year.Now suppose that A increases by 5% in period t.This increase in productivity growth will cause

• A)the real wage to rise and no change in the natural rate of unemployment.
• B)the WS relation to shift up more than the PS relation.
• C)the natural rate of unemployment to fall.
• D)the real wage to fall.

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Definitions:

Leisure Time

Free time that an individual can use for relaxation, recreation, or personal pursuits, not consumed by work or essential domestic activities.

Multiple Counting

In economics, it refers to the error of counting the same product or value more than once when calculating gross domestic product.

Psychic Costs

The mental and emotional energy expended by an individual in the process of decision-making or as a result of stressful economic conditions.

Real GDP

The measure of the value of economic output adjusted for price changes (inflation or deflation), reflecting the real quantity of goods and services produced.