Consider a simple economy with search and unemployment. The matching function is given by M = em(Q, A) = ear/5A\6. How many workers are involved in the production process? What is the aggregate production? [05 pts] 7. Derive the Beveridge curve. Calculate and interpret the slope of the Beveridge curve at the equilibrium. [08 pts] 8. Assume the government sets the wage 10% above its equilibrium value. What will be the unemployment rate and how does it compare to the initial one? [05 pts] 9. Assuming the economy is at the equilibrium calculated in 1), compute the percentage change in z that is needed to increase the vacancy rate by 5%. [05 pts] 10. Assuming the economy is at the equilibrium calculated in 1), compute the percentage change in b that is needed to reduce the unemployment rate by 5%. [05 pts]