IS-LM-PC model

An economy is initially at the natural level of output. Now suppose that there is an increase in the minimum wage.

1. a)How does the increase in the minimum wage affect the natural rate of unemployment? Explain in words and show the effect in the labor market graph.
2. b)How does it affect the Phillips curve? Explain verbally and show in the Philips-curve output graph.
3. c)Will the central bank react to this change in inflation? Why or why not? Explain how the centralbank's monetary policy will affect the economy in the medium-run. Show in the IS-LM-PC graphs.
4. d)Evaluate the following statement: An increase in the minimum wage has direct effects only on the supply of goods, but not on the demand.