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Assume That Expectations of Productivity Are Slow to Adjust

Question 28

Multiple Choice

Assume that expectations of productivity are slow to adjust. An increase in productivity growth from 2% to 5% will cause:


A) an increase in the real wage of 2% and an increase in un.
B) an increase in the real wage of 2% and a decrease in un.
C) an increase in the real wage of 3% and a decrease in un.
D) an increase in the real wage of 5% and an increase in un.
E) an increase in the real wage of 5% and a decrease in un.

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