A4. Suppose the Phillips curve equation is given by 7n; 7r;3 = 0.2 5ut. A 7 fraction of the workers have indexed labor contracts such that 7r;a = 77ft + (1 'y)7rt_1. Which of the following is true when the value of 7 increases? (a) ination is more sensitive to changes in unemployment (b) the natural rate of unemployment is higher (c) the natural rate of unemployment is lower (d) ination is less sensitive to changes in unemployment A1. Consider a closed economy. When C = co + c1YD, a decrease in c1 will cause which of the following to decrease? (a) equilibrium income (b) equilibrium disposable income (c) the multiplier (d) all of the aboveA9. Consider the human capital accumulation model with production function Y = AK \"H 1'\". Which of the following is false on the balanced growth path? (a) physical capital grows at the same rate as human capital (b) physical capital grows at the same rate as output (0) output grows at the same rate as productivity (d) physical capital to human capital ratio remains constant All. The existence of the J-curve suggests that a real appreciation will cause (a) an initial increase in net exports (b) a final increase in the demand for domestic goods (c) a final increase in net exports (d) an initial increase in exports