The labor market and the supply side of a macroeconomy in 2019 are described

by the following equations:

Production Function Y=aN,

Price Markup P={(1+z)/a}W,

Wage Adjustment W= W_-1{1+[N-N*/N^*]}

where Y is output, N is employment, P is price, W is current nominal wage, N* denotes the

full-employment level of employment, and a, z, and are all positive parameters.

We also have the following information:

N*=500, a=4, z=0.6, =0.8, and P=10 in 2018.

(a) Derive the AS curve for 2019.

Assume that the AD curve for the economy in 2019 is given by Y= 1000+10000/P

(b) Find the equilibrium levels of (i) output, (ii) price, and (iii) nominal wage in

2019. Notice that price level cannot be negative in equilibrium.