In the DMP model,an increase in productivity
A) shifts v(Q) down, increasing Q and j.
B) shifts v(Q) up, increasing Q and decreasing j.
C) shifts v(Q) up, decreasing Q and j.
D) shifts v(Q) down, decreasing Q and increasing j.
E) shifts v(Q) up, increasing Q and j.

Question

Quizplus · Accepted Answer

According to the DMP model, an increase in productivity leads to a shift in v(Q) upwards. This means that there is an increase in both Q (quantity of labor demanded) and j (the expected match surplus). Therefore, option E is the correct answer.

In the DMP Model,an Increase in Productivity