1. Assume that the price-setting curve is given as: = (1 + ) and the wage-setting curve is given as: W=p^euz

where are the unemployment benefits and is the unemployment rate. a) Find the real wage and the unemployment rate in the medium-term equilibrium. Is this the natural unemployment rate? b) How does the unemployment rate change in the balance if the unemployment benefits change? 2. Initially, the labor market is in equilibrium in wage ₀ and prices P₀ with unemployment rate ₀. Assume that competition suddenly becomes less intense in the commodity market. In the short run we assume that ^e, is constant. What will happen to the real balance salary? Compare the real equilibrium salary in the short term with that in the medium term. 3. Now suppose that the price setting curve is affected by energy prices (another factor of production) and is characterized by: = (1 + ) ^{1 - a} where is the value of a unit of energy. The wage-setting curve is given as: W=p^euz

a) Find the real wage and the unemployment rate in the medium-term equilibrium. Is this the natural unemployment rate? b) How does the unemployment rate change in equilibrium if the energy price changes? Why;