Order the answer to: A. If aggregate demand shocks are the most important drivers

Assignment Help business economics Order the answer to: A. If aggregate demand shocks are the most important drivers

business economics

Order the answer to: A. If aggregate demand shocks are the most important drivers

Question a. If aggregate demand shocks are the most important drivers of business fluctuations, then should we expect real wages to be procyclical (rising when GDP growth is high) or countercyclical (rising when GDP growth is low)?
b. If real shocks are the most important drivers of business fluctuations, then should we expect real wages to be procyclical or countercyclical?
c. Macroeconomists find mixed evidence on the link between business fluctuations and inflation. But there’s more agreement on the link between business fluctuations and real wages: The real wage is procyclical, growing quickly during good times and growing slowly or falling during bad times. Which of the two shocks (real or aggregate demand) is is this most consistent with? (We’ll revisit this question in the next chapter.)
Subject business economics
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