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

Monopoly model, Use the monopoly model to explain how providers are able to...

Use the monopoly model to explain how providers are able to charge different groups of patients different prices.

Rapid growth of the national debt, He rapid growth of the national debt ala...

He rapid growth of the national debt alarmed some politicians and created pressure for restricting Congress's unlimited ability to spend. Efforts to Reduce the Deficit, discuss the

Online homework, I want you to do online homework about The Influence of M...

I want you to do online homework about The Influence of Monetary and Fiscal Policy on Aggregate Demand All the questions around 10

Montary policy, Examine the efficiency of quanttitative credit control inst...

Examine the efficiency of quanttitative credit control instrument

Firm wants to sell goods, If a firm wants to sell goods more often, would t...

If a firm wants to sell goods more often, would they prefer to produce a high quality good that will not wear out or one that will wear out faster. For example, what is the 'life e

Example of fixed investment-accounting system, Example of Fixed Investment-...

Example of Fixed Investment-ACCOUNTING SYSTEM   Consider again the economy in example III. An inventor offers to construct some machines for each of the three companies which wo

Equilibrium analysis, A vital question is whether the equilibrium we have i...

A vital question is whether the equilibrium we have identified in labor market (with a high unemployment rate) can remain in long run. Will there not be adjustments which will take

What is difference between explicit cost and implicit cost, What are the di...

What are the difference between explicit cost and implicit cost? Both are concerns to Opportunity Cost and Decisions: An explicit cost is a cost which involves essentially

Determine the term- nominal wages, Determine the term- Nominal wages Th...

Determine the term- Nominal wages The nominal wage is wage per unit of time in currency used in the country- what we mainly just call wage. When we refer to wage in macroeconom

A history of canadian economy, i have an assignment i need it to be done by...

i have an assignment i need it to be done by thursday march the 10th before midnight

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