Explain how an increase in the price level will impact the AE function. Suppose that Jan's income in year 1 was $45,000. Over the next four years. his income increases by 5 percent per year. At the same time= the economy experiences an ination rate of 2 percent per year. At the end of four years. what will be Jan's real income? Show Calculations Suppose actual output is equal to potential output, the natural rate of unemployment is 4% and frictional unemployment is 1%. What are cyclical and structural unemployment rates? Show Calculations