Re: DSE 2007 q32,33,34..URGENT,pls help

Posted by Dreyfus on Jun 27, 2014; 10:35am
URL: http://discussion-forum.276.s1.nabble.com/DSE-2007-q32-33-34-URGENT-pls-help-tp7593691p7593696.html

Q32. The full employment of aggregate labor force L, means unemployment must be zero which is equivalent of zero unemployment rate. So by using the price setting relation nd wage setting relation P = (1+ lambda)*Pe*(1-(alpha*u))
Setting u=0 yeids P/Pe = 1+ lambda
Q33. Given Y = N also u = U/L
Where U = L-N = L-Y
u = (L-Y)/L
Using the relation in q32 above,  P = Pe*(1 + lambda)*(1-alpha*((L-Y)/L))
 dP/dY >0 hence Actual price level increases
Q34. dP/dL <0 thus Actual price level decreases