Suppose that the markup of goods prices over marginal cost is 6%. The wage-setting equation is g=10.8u A. What is real wage consistent with equilibrium in the labor market in the medium run? B. What is the unemployment consistent with equilibrium in the labor market in the medium run? C. What is the effect of an increase in minimum wage on real wage and unemployment rate? Use the model of wagesetting and price-setting relationships for ll in the blanks. An increase in minimum wage can be represented by a/ an 1 This means that the 2 will shift 3 . To reach equilibrium, the economy moves along the 4 . The natural rate of unemployment will 5 and real wages will 6 . 1. (a) increase in m (b ) decrease in m (0) increase in z (d) decrease in z 2. (a) WS curve (b) PS line 3. (a) upwards (b) downwards 4. (a) WS curve (b) PS line 5. (a) be higher (b) be lower (c) unchanged 6. (a) be higher (b) be lower (0) unchanged