Determine the natural rate of unemployment, Public Economics

Suppose the firm mark up over the cost is 10% and the wage setting equation is W=P (1-u) where U is the unemployment rate.

a) Find out the real wage rate implied by the price setting equation.

b) Determine the natural rate of unemployment.

c) Plot the wage- setting and price setting equation or a property labelled graph and identity the nature rate of unemployment.


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