Assuming all else equal, the following happens in the economy. “Wages have grown more slowly than the economy in the wake of the 2008 crisis, and faster growth in recent months has been offset by rising inflation. The most recent available data, average hourly wages increased by 2.9 percent, but after adjusting for inflation, the increase was just 0.2 percent according to Department of Labor. … The Fed noted the turn toward nonwage compensation. The survey said that companies seeking workers, rather than baiting their hooks with wage increases, “were increasingly using benefits — such as vacation time, flexible schedules and bonuses — to attract and retain workers, as well as putting more resources into training. For the median worker, benefit compensation has increase 5 percent. With this change, labor costs in net increased compared to last year level.” What would happen in SR and LR equilibrium? Explain using aggregate demand and aggregate supply model.
Assuming all else equal, the following happens in the economy.
“Wages have grown more slowly than the economy in the wake of the 2008 crisis, and faster growth in recent months has been offset by rising inflation. The most recent available data, average hourly wages increased by 2.9 percent, but after adjusting for inflation, the increase was just 0.2 percent according to Department of Labor. … The Fed noted the turn toward nonwage compensation. The survey said that companies seeking workers, rather than baiting their hooks with wage increases, “were increasingly using benefits — such as vacation time, flexible schedules and bonuses — to attract and retain workers, as well as putting more resources into training. For the median worker, benefit compensation has increase 5 percent. With this change, labor costs in net increased compared to last year level.”
What would happen in SR and LR equilibrium? Explain using aggregate demand and
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