Problem 2 / 5 [15 marks] This question examines the DMP model of search and unemployment seen in class. Recall that the two equations determining equilibrium in this model are given by: 1/(Q) = b + e[m(1,j)]a[z b], 1 k \"'1'? = (1a)(zb) 1. Explain what decisions rms in the DMP model make, and how they make them.([5 pts]) 2. Draw and carefully label the two graphs depicting equilibrium in the model.([2.5 pts]) 3. How will a decrease in the benet 5 aect the equilibrium market tightness j, the unemploy- ment rate, the vacancy rate and the aggregate output? Explain intuitively.([2.5 pts]) 4. How will a decrease in the productivity 2 affect the equilibrium market tightness j, the unemployment rate, the vacancy rate and the aggregate output? Explain intuitively.([2.5 131331) 5. How will an increase in the cost of recruting k affect the equilibrium market tightness j, the unemployment rate, the vacancy rate and the aggregate output? Explain intuitively. ([2.5 ptSD