Explain what effect a reduction in the unemployment rate will have on the real wage based on: (1 ) the WS relation; and (2 ) the PS relation

What will be an ideal response?

A reduction in the unemployment rate will increase bargaining power, increase the nominal wage, and therefore increase the real wage based on wage setting behavior. Changes in the unemployment rate have no effect on the real wage based on price setting behavior.

Economics

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A temporary increase in the price of oil would

A) increase both short-run and long-run aggregate supply. B) decrease both short-run and long-run aggregate supply. C) increase short-run aggregate supply and decrease long-run aggregate supply. D) decrease short-run aggregate supply and leave long-run aggregate supply unchanged.

Economics

In the following production function, Y = f(K, NA), a 20% increase in A will cause which of the following variables to increase by 20%?

A) labor B) effective labor C) output D) output per worker E) none of the above

Economics