Assume That Expectations of Productivity Are Slow to Adjust

Multiple Choice

Assume that expectations of productivity are slow to adjust. Further assume that A had been increasing by 2% a year. Now suppose that A increases by 6% in period t. This increase in productivity growth will cause:

A) the real wage to rise and no change in the natural rate of unemployment.
B) the PS and WS relations to shift up by the same amount.
C) the WS relation to shift up more than the PS relation.
D) the real wage to fall.
E) the natural rate of unemployment to fall.