Q1. a. Output growth to is 1% above normal cause only a 0.4% reduction in the unemployment rate rather than a 1% reduction in the unemployment rate. Illustrate what are the two reasons Explain why unemployment does not fall by the same 1%? Elucidate.

b. Assume nominal money growth equals 3% also inflation equals 5%. Given this information, Elucidate Illustrate what happens to the growth rate of output?

Q2. Assumes the perfectly competitive firm is in long-run equilibrium also there is an rise in Demand. As a result the firm in the short run will rise output along its