Compute real wage rate given labor demand and supply curve, nominal wage rate. Also Compute long run equilibrium price level and policy makers action (shift in Aggregate Demand Curve).
You are given the following labor demand and labor supply curves for the economy.
N = 250-2(W\\P) N = 3(W/P)
Suppose that the nominal wage rate equals 60. In the short-run, aggregate demand and aggregate supply are equal at a price level of 1.0. Compute the real wage rate. describe where actual real output is relative to natural real output. Suppose that policymakers change aggregate demand so that in long-run equilibrium, the nominal wage rate stays at 60. What is the long-run equilibrium price level? describe whether policymakers took actions that increased or decreased aggregate demand