For this question,assume that expectations of productivity are slow to adjust.An increase in productivity growth from 1% to 3% will cause
A)an increase in the real wage of 1% and an increase in un.
B)an increase in the real wage of 1% and a reduction in un.
C)an increase in the real wage of 3% and an increase in un.
D)an increase in the real wage of 3% and a reduction in un.

Question

Quizplus · Accepted Answer

An increase in productivity growth typically leads to an increase in real wages as firms can afford to pay workers more without raising prices. Additionally, higher productivity can lead to lower unemployment as it can stimulate economic growth, leading to more job creation.

For This Question,assume That Expectations of Productivity Are Slow to Adjust.An