Find the equilibrium level of employment

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Reference no: EM131000003

Consider an economy in which the labor demand function is 40 - (W/P), the labor supply function is 40 + (W/P), the production is Y = 30 + 12L. Suppose the money supply is $333 and the velocity is 4. What is the equilibrium level of employment L* and the equilibrium of price level P*? Hint: Find the equilibrium level of employment from the equality of labor demand and labor.

A) L*=32, P*=5.

B) L*=30, P*=2.

C) L*=34, P*=3.

D) L*=35, P*=6.

Reference no: EM131000003

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