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.