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

Indiana toll road at the rate of two per minute, Automobiles arrive at the ...

Automobiles arrive at the Elkhart exit of the Indiana Toll Road at the rate of two per minute. The distribution of arrivals approximates a Poisson distribution. A) What is the prob

What do you understand production method, Question 1 Discuss the relation...

Question 1 Discuss the relationship between microeconomics and macroeconomics Question 2 What do you understand production method? What precaution should be taken while

Cost curves, the difference between the AC and the AVC curve

the difference between the AC and the AVC curve

Unemployment rate, I''m having trouble understanding the supply curve

I''m having trouble understanding the supply curve

List of major emerging-market economies, List of major emerging-market econ...

List of major emerging-market economies To determine if the UK is to benefit from growth of emerging-market economies in the future, it should start exporting goods and specif

Explain ad-curve at a given point in time, AD-curve, just like before, disp...

AD-curve, just like before, displays combinations of Y and P where both goods market and money market are in equilibrium. At any given instance, even when we have inflation, aggreg

Indicate the beginnings, Which of the following would indicate the beginnin...

Which of the following would indicate the beginnings of an expansion of the economy? a. Fewer new firms are started. b. Stock market prices decline c. Consumer confidence improves

Help, i want an answer for my q Question 3 (5 marks) Most studies of firm...

i want an answer for my q Question 3 (5 marks) Most studies of firms’ long run costs have found that average costs decline as firms produce increasingly larger output levels (eco

Recent study of long distance phone calls, A recent study of long distance ...

A recent study of long distance phone calls made from WPU, showed that the length of the calls follows the normal probability distribution with a mean of 3.2 minutes per call and a

Determine the term- gdp per capita, Determine the term- GDP per capita ...

Determine the term- GDP per capita GDP, being a flow, isn't a measure of the total wealth of a country though a measure of the "income" of country during a certain period of ti

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