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!
The AS curve
Say that nominal wage in year 1 (at a particular point in time) is equal to 1000. On the horizontal part of response curve, real wage is constant and equal to its maximum value. Let's say that (W/P) MAX = 10. On horizontal part P1 = 100 where P1 is the price level in year 1. Firms will use at most LB at this real wage. For firms to hire more than LB, P1should be higher than 10. We realize that AS curve at this point in time, AS1 will look like before. First, it's horizontal along P = 10, then for higher Y. it is upward sloping.
Assume that ΠW is equal to 10%. Subsequent year, nominal wages would be equal to 1100. Wages in year 2 are determined by ?Wthat is an exogenous variable, making wages in year 2 exogenous. As maximum real wage is given and equal to 10, we determine that P2 is equal 110 on the horizontal part of response curve and that P2> 110 on the downward sloping part. AS2 glides upwards up by 10% as given by wages inflation. Using same argument, P3 = 121 on horizontal part of the response curve at year 3 and so on.
Just like AD curve, AS curve is to glide downwards or upwards depending on whether ΠW < 0 or ΠW > 0 when we allow for inflation. As for AD curve, AS curve is applicable only at a specific point in time if ΠW ≠ 0. At another point in time, we should draw a new AS curve.
Figure: AS curve gliding if ΠW ≠ 0
Q. Explain the Money market diagram? Let's begin by studying the money market when GDP is given. When Y is given, MD will only rely (negatively) on R and we can draw a figure w
hi I just found an interesting problem on your page,(wood investments ... Mutch PLC) I would like to see the answer Could you please give me a quote for the answer?
Indicate whether each of the following statements is true, false, or uncertain, and explain your answer. Your grade will depend primarily on the quality of your explanation.
Which of the following is a result of an export subsidy? a. The imposing nation always benefits from an export subsidy. b. The imposing nation suffers a terms of trade loss from an
Explain about the elasticity and total revenue. Elasticity and Total Revenue: a. When demand for a good is elastic, a raise in price decreases total revenue. Then Sales effe
what is credit multiplier?
BENEFITS OF GDP
This is a maple assignment, but it is also a research assignment. You will have to consult earlier worksheets, textbooks, and perhaps the internet to answer some of these questio
The U.K. produces and imports eggs. Suppose that the government imposed a quota on imports: Foreign suppliers could export no more than Q eggs (regardless of price). What effect do
WHY IS INTERNATIONAL TRADE IMPORTANT IN SOUTH AFRICA
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: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd