MORE ON UNEMPLOYMENT
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TEST YOURSELF
1.
Briefly outline the various approaches to explaining the
phenomenon of involuntary unemployment.
2.
Why do firms pay efficiency wages, and what prevents the
market from clearing in an efficiency wage labour market?
3.
Why are nominal wages sticky in the short run? How would
the aggregate supply curve differ in the situation when the
wage adjustment is slow as compared to the case where
the wage adjustment is fast?
4.
What is staggered wage setting and why is it prevalent?
5.
Why is the long-run aggregate supply curve inelastic even
though the short-run aggregate supply curve is elastic? ...
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