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

Project topics, i want a project topics in macroeconomics

i want a project topics in macroeconomics

solow model, critically explain solow model of economic growt

critically explain solow model of economic growth

Money, determinants of money supply

determinants of money supply

Assumptions of the AS-AD model, Q. Assumptions of the AS-AD model? The ...

Q. Assumptions of the AS-AD model? The most significant change we make going from IS-LM model to AS-AD model is to allow P to be endogenous. As P was constant in IS-LM model, w

Aggregate demand curve slopes downward, Which of the following is a reason ...

Which of the following is a reason why the aggregate demand curve slopes downward? a. At a higher price level, fewer goods and services are available. b. Periods when the price lev

Porter''s model affect, How do the five competitive forces in Porter's mode...

How do the five competitive forces in Porter's model affect the profitability of the overall industry? For example, in what way might weak forces increase industry profits, and in

What is privatization?, Privatization is the move of ownership from the pub...

Privatization is the move of ownership from the public sector (government) to the private sector (business).

Taxation, with reference to incidence of taxation, explain with the help of...

with reference to incidence of taxation, explain with the help of a diagrams, who bears the incidence of taxation when the demand for a commodity is (i)perfectly inelastic (ii) uni

Social cohesion and increase the scope, "International bodies such as the a...

"International bodies such as the aced argue that more unequal income and wealth distribution erode social cohesion and increase the scope for internal conflict."

In urdu, circular flow of national income?

circular flow of national income?

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