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H5 (Unemployment (Involentary (Frictional: time inbetween jobs, Structural…
H5
Unemployment
Volentary
Involentary
Frictional
: time inbetween jobs
Structural
: absence of demand
Cyclical
: Caused by economic state
Caused by Labour unions
Wage rigidity
trade off
Jobs
Wages
Insiders have powers
Raise in income
substitution
: work more to earn more
income
: work less and earn the same
Aggregate demand
Firms
maximizing
profits
đťś‹=pF(K,L)-
WL
W/P=F(L)'
Efficiency wages
Higher wage to motivate workers
Aggregate supply
: total person-hours
w :arrow_up:: more workers
Upward sloping
Aggregate less steep than individual