What do you mean by wage inflation, Macroeconomics

Assignment Help:

Q. What do you mean by Wage inflation?

We will develop the Keynesian model removing the assumption of fixed nominal wages. We state wage inflation pw as the percentage average increase in wages. Wage inflation and wages are still exogenous which means they aren't determined within the model. One explanation for this assumption is that wages frequently are determined by agreements which often last for many years. 

We don't need a new model to deal with inflation. Non-constant wages may be handled within all three Keynesian models as long as they are exogenous. Reason we chose to let wages be constant in previous Keynesian models were completely pedagogical - these models are easier to understand when wages are constant.


Related Discussions:- What do you mean by wage inflation

Explain about price inflation, Q. Explain about Price Inflation? The ma...

Q. Explain about Price Inflation? The major reason for allowing for non-constant wages in the model is that we then can allow for persistent deflation/inflation. With constant

What is the total cost of producing output, What is the total cost of produ...

What is the total cost of producing output? The total cost of producing a specified quantity of output is the total of the fixed cost along with the variable cost of producing

Government and price-determination, Government and Price-Determination can ...

Government and Price-Determination can be understood as follows: The government might intervene in the market and mandate the maximum price (price ceiling) or the minimum price

Public sector, Are there any current subsidy or welfare issues that are bei...

Are there any current subsidy or welfare issues that are being discussed or addressed in parliament or in municipalities

Discuss about asymmetric information, A) With asymmetric information, free ...

A) With asymmetric information, free markets may not lead to efficient outcomes because the market for a service or product may break down due to adverse selection. Explain what ad

Moving along a demand curve, Moving along a demand curve, quantity demanded...

Moving along a demand curve, quantity demanded decreases 8 percent when price increases 10 percent. a. The price elasticity of demand is calculated to be____________ b. Given the

International trade, what does international trade fails to its claims ?

what does international trade fails to its claims ?

Flossy''s budget constraint, Flossy has a quasi-linear utility function, 16...

Flossy has a quasi-linear utility function, 16q1^0.5 + q2. The price of good 1 is fixed at one. Thus, Flossy's budget constraint is q1 + p2q2 =Y, where Y denotes income. 6.1 Compu

Aggregate demand and supply diagram, Using an aggregate demand and supply d...

Using an aggregate demand and supply diagram, explain how each of the following scenarios affects the equilibrium price level and aggregate output. Consider first the short-run, th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd