In a closed-market economy with unionized labor, suppose unions suddenly get a significant negotiation power on...

In a closed-market economy with unionized labor, suppose unions suddenly get a significant negotiation power on labor contracts at time t∗ and thereby enforced a real wage rate that is 10 percent higher than the market-clearing real wage rate. What would be the effect of this on unemployment, rental rate of capital, real interest rate in long run and very-long run? What would be the effect of using expansionary fiscal policy against this? Explain in detail by showing the changes in the relevant markets.

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Rahul Sunny answered 1 year ago

in what industries do labor unions play a significant role? how do labor unions affect unemployment?

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Suppose there are two closed economies: Economy A and Economy B. Economy A has a high...

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Suppose a closed economy (economy that does not engage in international trade) is described by the...

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In a closed-market economy with unionized labor, suppose unions suddenly get a significant negotiation power on...

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in what industries do labor unions play a significant role? how do labor unions affect unemployment?

Suppose the current equilibrium point for the market of good for a closed economy is (200,...

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