Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
NOMINAL RIGIDITIES VERSUS REAL RIGIDITIES
Nominal rigidities are said to exist when nominal prices and wages do not change in the face of conditions that call for their change. As you have seen in earlier units, this will lead to Keynesian unemployment. But unemployment can also come about because of certain real rigidities in the economy. Such rigidities can exist in the goods market, the labour market or even the market for credit.
There could exist reasons why the real wage paid in the labour market is higher than the market-clearing wage. This will, of course, lead to unemployment of some of those who are willing to work at a lower (market-clearing) wage. We are not talking here about the nominal wage not changing when it needs to change, but about firms rationally and voluntarily deciding to pay higher real wages to their workforce because they find it to their advantage in some way. We will explain this concept of real rigidities better when we list out all such rigidities in Section 15.5 and the sub-sections therein. The New Keynesian economists stress both the nominal and real rigidities to explain the presence of booms and bust/ persistent unemployment in the real world.
1
NATIONAL INCOME ACCOUNTING This refers to the measuring of the total flow of output (goods and services) and of the total flow of inputs (factors of production) that pass thro
Causes There are a number of explanations of the business cycle but changes in the level of investment seem to be the most likely. In the simplest Keynesian model an increase
How does economic theory contribute to managerial decisions?
Explain Managerial economics according to Mote and Paul Haynes, Mote and Paul: "Managerial economics refers to those characteristics of economics and its tools of analysis mos
Opportunity cost is cost of a different that must be forgone in order to pursue a definite action. Put another way, the advantages you could have received by taking an alternative
definition of discounting concept
Illustrate the application of economic theory to some business problems
monopolistic competition
williamson''s model describe
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd