Re: Pls help....DSE question no.50 from 2012..

Posted by Prerna on Jun 16, 2013; 4:21pm
URL: http://discussion-forum.276.s1.nabble.com/Pls-help-DSE-question-no-50-from-2012-tp7581932p7582386.html

Hi Maahi

Ques 51.

Wt = Pt/(1 + u), substitute this in the wage setting equation.
==> Pt/(1 +u) = PteF(ut,At) = Pt = PteF(ut,At)(1 +u)

Divide throughout by Pt-1 and substitute for Pt/Pt-1 = Πt -1 and Pte/Pt-1 = Πte -1

You will get your answer :)