11. In our model, the affects of changes on wages are ambiguous because the income and substitution effects move in opposite directions. How do (many) macroeconomists deal with this ambiguity in terms of study- ing business cycle? How do economists resolve this ambiguity when studying long term economic development?
11. In our model, the affects of changes on wages are ambiguous because the income and substitution effects move in opposite directions. How do (many) macroeconomists deal with this ambiguity in terms of study- ing business cycle? How do economists resolve this ambiguity when studying long term economic development?
Chapter1: Making Economics Decisions
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![11. In our model, the affects of changes on wages are ambiguous because the
income and substitution effects move in opposite directions. How do
(many) macroeconomists deal with this ambiguity in terms of study-
ing business cycle? How do economists resolve this ambiguity when
studying long term economic development?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51fad9bb-0366-4e8c-8246-656d968a9d4f%2F194463bd-77d2-427f-ac0e-47bc27fb7dfe%2Fda5y9d.png&w=3840&q=75)
Transcribed Image Text:11. In our model, the affects of changes on wages are ambiguous because the
income and substitution effects move in opposite directions. How do
(many) macroeconomists deal with this ambiguity in terms of study-
ing business cycle? How do economists resolve this ambiguity when
studying long term economic development?
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