2) Draw the PF & Labor Market model assuming that initially the country Austria had 200,000 workers in their labor force earning a wage equilibrium of $20.00/hour and producing a level of output close to $2.5 Million. However, after a negative technology shock, the level of productivity per worker greatly decreased, which in turn reduce the labor demand by 50% of the current work force which in turn decrease Real gdp by 40%. As a result of these changes the wage equilibrium in Austria decreased around $14/hour. Graph the two models by showing the changes within each scenario and correctly labeling all curves accordingly.

2) Draw the PF & Labor Market model assuming that initially the country Austria had 200,000 workers in their labor force earning a wage equilibrium of $20.00/hour and producing a level of output close to $2.5 Million. However, after a negative technology shock, the level of productivity per worker greatly decreased, which in turn reduce the labor demand by 50% of the current work force which in turn decrease Real gdp by 40%. As a result of these changes the wage equilibrium in Austria decreased around $14/hour. Graph the two models by showing the changes within each scenario and correctly labeling all curves accordingly.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter21: Unemployment

Section: Chapter Questions

Problem 11RQ: If you an? out of school but working part time, are you considered employed or unemployed in U.S....

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