Aggregate Supply - The Short Run Aggregate supply curve - changes in the nominal wages
4 important questions on Aggregate Supply - The Short Run Aggregate supply curve - changes in the nominal wages
Are nominal wages flexible? How about when enough time has passed?
How do we describe a rise in nominal wages?
How does the decline in the nominal wages, shift the short-run aggregate supply curve
- The decline in the nominal wages,
- reduces production cost,
- aggregate supply increases
- and shift the short-run aggregate supply curve to the right.
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How do we describe the knock off effect, affect the nominal wage
- When the price of a commodity increases, the overall price of goods in an economy increased
- many contracts included cost-of-living allowances that automatically raised the nominal wage when consumer prices increased
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