Get the answer of: What is Aggregate Supply (AS)? Aggregate supply (AS) describes the behaviour and responsiveness of all producers (business firms) to price changes. The two main forces lying behind AS are: (i) The level of potential output (which depends on the state of the economy, i.e., whether it is at full employment or having unemployed resources), and (ii) [...]
Let us make an in-depth study of the Wage Indexation. After reading this article you will learn about: 1. Importance of Wage Indexation 2. Types of Wage Indexation. Importance of Wage Indexation: Wage indexation is important because labour markets do not clear instantaneously. A complete indexation implies real wage rigidity, whereas the absence of indexation entails nominal wage rigidity in [...]
Disinflation and the Sacrifice Ratio! Most people do not like inflation. Inflation has adverse political implications also. In the past, many governments have lost power due to their inability to keep inflation under control. This is why it is the objective of any government policy to keep inflation under control so that the voters can breathe more freely. However, at [...]