5. The production function is given by Y=K'5{AN}'5 . Suppose the average labor productivity is ID. After a 10% increase in K and N (holding A constant). the output Y increases by , average labor productivity becomes . Now suppose A also grows at a positive rate. If the Solow residual is 0.1. then the growth rate of A is ti. Using the WS PS model. we studied the effects of productivity growth on unemployment in the medium run. If P\" = P and A\" = A , then the natural rate of unemployment is {positively related with f negatively related with f independent of) productivity growth. If P' = P and A' an A {because productivity growth slow down), then the natural rate of unemployment is {positively related with f negatively related with f independent of) productivity growth. T. let 3,): and IM denote the real exchange rate, exports and imports, respectively. Let ds,.dX and MM denote changes in s,X and 1M , respectively. The Marshall-Loner condition is