What is labor market, Macroeconomics

Assignment Help:

Q. What is Labor Market?

Labor market in the IS-LM model is the same as in cross model. Hence the IS-LM model is only applicable if profit-maximizing quantity of L would result in an aggregate supply that was larger than aggregate demand and aggregate demand will consequently determine L.

Once R and Y is determined, all the endogenous variables are concluded. The figure below demonstrates the determination of Y, R and L in IS-LM model.

1017_What is Labor Market.png

Figure: Determination of Y, R and L of the IS-LM model

We start at top to the left and extend Y* down, through the 'mirror' at the bottom left, on to production function at the bottom right and then up to the figure representing labor market. 

IS-LM is simply an extension of cross model in the sense that interest rate becomes an endogenous variable and we will be able to analyze how the interest rate is affected by changes in the economy. We could have developed IS-LM model directly, skipping the cross model as cross model adds nothing in relation to IS-LM model. The reason that most books start with cross model is entirely pedagogical. Cross model is much simpler as GDP can be determined from the goods market only as the solution to one equation one equation Yd(Y) = Y. Most students will probably find IS-LM model even more complicated had they not previously encountered cross model.


Related Discussions:- What is labor market

Supply-side economics market freedom, What is Supply-side Economics Market ...

What is Supply-side Economics Market Freedom? Markets must be allowed to work more freely and steps taken to improve this efficiency by:   freeing them from governm

Trade barries , #discuss the arguments for and against the use of trade bar...

#discuss the arguments for and against the use of trade barries in anay counrty

How price level rises differ from price rises, How price level rises differ...

How price level rises differ from price rises In macroeconomics, it's common to use term "prices" or "price" as short for price level. Expression "prices rise" must be interpre

To compare prices what is consumers ability, How has the Internet revolutio...

How has the Internet revolution affected the workings of businesses, consumers, and government in a free market economy? Specifically, how has Internet affected businesses' ability

Underlined phrase above referring, What is this underlined phrase above ref...

What is this underlined phrase above referring to in the chapter lecture? Select one: a. Physical capital b. Social capital c. Human capital d. Entrepreneurship e. Growth com

Economic theory helps society, Do you agee or disagree " Economic theory he...

Do you agee or disagree " Economic theory helps society reach economic goals that it has selected for itself?" Justify your answer.

Effect of distance on completed, From stock and watson 3rd edition introduc...

From stock and watson 3rd edition introduction to econometrics Using the data set CollegeDistance described, run a regression of years of completed education (ED) on distance to t

Determine about the expected inflation, Determine about the Expected inflat...

Determine about the Expected inflation Note that it is changes in prices during 2008 which matter for the high real interest rate (the time period when your deposit is earning

Labor Economics, Assume Workers Comp awards $X to workers not working becau...

Assume Workers Comp awards $X to workers not working because of injury. $X is set to equal the workers previous wages. Once workers return to work, the award payments stop. Suppose

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd