Assume That Expectations of Productivity Growth Adjust Slowly Over Time

Multiple Choice

Assume that expectations of productivity growth adjust slowly over time. For this economy, a decrease in productivity will most likely cause which of the following to occur?

A) An increase in the natural rate of unemployment.
B) A decrease in the markup over labour costs.
C) An increase in the markup over labour costs.
D) A decrease in the natural rate of unemployment.
E) A decrease in the real wage.