Macro midterm spring: Implies a countercyclical wage: a rise in demand leads to an increase in prices, which decreases real wages - which leads to a decrease in labor supply - decrease in output.

Question

Implies a countercyclical wage: a rise in demand leads  to an increase in prices, which decreases real wages -> which leads to a decrease in labor supply -> decrease in output.

Daniel Ortega · Accepted Answer

Keynesian Model with rigid nominal wages

Macro midterm spring

Implies a countercyclical wage: a rise in demand leads to an increase in prices, which decreases real wages -> which leads to a decrease in labor supply -> decrease in output.

Keynesian Model with rigid nominal wages

Author