Homework Help: Economics

Posted by Sarah on Thursday, April 26, 2007 at 1:27am.

3. Starting from short-run equilibrium, the following occurs: Labor productivity rises, and individuals expect higher (future) incomes. What will be the effects on the price level, Real GDP, and the unemployment rate in the short run?

a.Real GDP will fall, the unemployment rate will rise, and the price level will rise.
b.Real GDP will rise, the unemployment rate will fall, and the effect on the price level cannot be determined.
c.Real GDP will rise, the unemployment rate will fall, and the price level will fall.
d. Real GDP will fall, the unemployment rate will rise, and the effect on the price level cannot be determined.
e. Real GDP will rise, the unemployment rate will rise, and the price level will rise.

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