This question examines the Diamond-Mortensen Pissarides model of search and unemployment seen in class. Recall that the two equations determining equilibrium in this model are given by: v(Q)= b + em(1, j) a (z-b) and em (1/j,1) =k/(1-a)(z-b) 1. Draw and carefully label the two graphs depicting equilibrium in the model. [4 pts] 2. Suppose that there is a technological change that reduces the costs of recruiting for firms. Use the DMP model to determine the effects on: [6 pts] i. Labour market tightness ii. Labour force iii. The unemployment rate iv. The vacancy rate v. The number of firms vi. Aggregate output