Calculation of real wage rate given labor demand and supply

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You are given the following labor demand and labor supply curves for the economy.                         

                                d                                                                   s

                        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.  Explain 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? Explain whether policymakers took actions that increased or decreased aggregate demand.

Reference no: EM1313811

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