II. Short answer questions (10 points) 10. Assume that constant returns to scale exists and that N and K both decrease by 3%, then Y will decrease by %. 11. Suppose that the rate of depreciation is 10% per year, the population growth rate is 2% per year, and the growth rate of technology is 3% per year. Then, the steady state growth rate of effective labor” is %, the steady state growth rate of output %, the steady state growth rate of output per worker is %. The level of investment needed to maintain a constant capital stock is and the level of investment needed to maintain a constant capital per effective labor is 12. When the unemployment rate is on the horizontal axis and the real wage is on the vertical axis, an increase in productivity will cause the wage-setting curve to shift (up/down) and the price-setting curve to shift (up/down). 13. Suppose workers' and firms' expectations of the price level and productivity are accurate. In this case, an increase in productivity will cause (an increase/a decrease/no change) in the real wage and (an increase/a decrease/no change) in the natural rate of unemployment.

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