2)

Let's assume that the efficient wage setting of companies is determined by the equation

Wd = (1.02 - 0.4u)W

What is the natural rate of unemployment (un)?

Group of response options

2%

4%

6%

5%

10%

3)

The central bank of some country is on an inflation target. Productivity increases unexpectedly. What is most likely to happen?

Group of response options

Supply increases, but demand decreases, so the central bank will probably lower interest rates

Both supply and demand are increasing, so it is not clear whether the central bank will raise or lower interest rates

Supply is decreasing, but demand is increasing, so the central bank will probably raise interest rates

Both supply and demand are decreasing so it is not clear whether the central bank will raise or lower interest rates