Unemployment rate question?

Question

1) Suppose that a stock market crash causes aggregate demand to fall. What happens to output and the price level in the short run? what happens to unemployment rate?

2)Use the sticky wage theory of aggregate supply to explain what will happen to the output and price level in the long-run(assuming there is no policy change) what role does the expected price level play in this adjustment? Illustrate your analysis in a graph.....

can someone plz help me with these questions...igot a final coming up.....

Answer 1

1) Price level and output both will fall, unemployment will rise.

2) Sticky wage will cause rise of unemployment more than without sticky wage effect, thus supply may fall in the long-run which and consequently will lead to some rise in price level.