For this question,assume that workers expectations of the price level and productivity are accurate.Now suppose that the economy experiences an increase in productivity.Which of the following will occur in the medium run?
A)no change in unemployment
B)an increase in unemployment
C)a reduction in unemployment
D)no change in the natural level of output if the unemployment rate does not change
E) none of the above

Question

Quizplus · Accepted Answer

In the medium run, an increase in productivity will not change the unemployment rate because the natural rate of unemployment is determined by factors such as labor market policies and institutions, not by productivity changes.

For This Question,assume That Workers Expectations of the Price Level