George (445-42-5432) and Christina Campbell (993-43-9878) are married with two children, Victoria, 7, and Brad, 2.
September 3, 2020
This midterm exam consists of four questions. Please answer them using APA format. Two to three pages should be sufficient for each question.
September 4, 2020

Suppose that the markup of Goods prices over marginal cost is 5% and that the wage-setting equation isn

W = P ( 1 – u ),

where u is the unemployment rate

a. what is the real wage, as determined by the price-setting equation?

b. what is the natural rate of unemployment?

c. suppose that the markup of prices over costs increases to 10%. What happens to the natural rate of unemployment? Explain.

KM
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