Discuss the various types of frictions and distortions in labor
and product markets that make the...
50.1K
Verified Solution
Link Copied!
Question
Economics
Discuss the various types of frictions and distortions in laborand product markets that make the adjustments of wages and pricesslow, according to New Keynesian macroeconomists.
Answer & Explanation
Solved by verified expert
3.7 Ratings (477 Votes)
Ans The new Keynsian macroeconomists put forward basically two arguments in favour of wage and price rigidity in labor and product markets respectively The slow adjustment of wages in the labor market is explained by the efficiency wage hypothesis which states that wages are set not to clear market The incentive of the entrepreneurs is to pay their employees more than the the
See Answer
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
