ECON102 Lecture Notes - Lecture 4: Real Wages, Deflation, Gdp Deflator

• School: University of Waterloo
• Department: Economics
• Course: ECON102
• Professor: Maryann Vaughan

Document Summary

The age distribution of the population: a younger or older population will influence the number of new job seekers and the amount of frictional unemployment. The scale of structural change: if technological change is swift and foreign competition is fierce, structural unemployment will be high. The real wage rate: the real wage rates that bring unemployment are: minimum wage, efficiency wage. As selected by the firm to attract a better applicant pool, encourage hard work and discourage worker turnover: these wages will bring unemployment if they are set above the market equilibrium wage. Will increase unemployment by lowering the cost of searching for work. Money wages will be reduced in inflationary periods so workers are worse of the higher price is higher income for the employer. Redistributes wealth: in a contract, unexpected inflation transfers purchasing power from creditors (lenders) to debtors (borrowers) With unexceptional inflation, borrowers benefit, lenders lose.