Intra-firm Coordination vs. Economy-Wide Inconsistency in the WS-PS Model

Adjustment Mechanism from Low Employment Disequilibrium in the WS-PS Model

Policy-Induced Shift Away from Nash Equilibrium

Divergence of Short-Run and Long-Run Policy Effects

Activity: Tracing Actor Responses to a Policy Shock in the WS-PS Model

The WS-PS Equilibrium as a Weak and Slow-Acting Magnet

Sequential Wage and Price Setting by Firms

Definition of the Bargaining Gap

Consider an economy described by the wage-setting (WS) and price-setting (PS) model. If the current level of employment is significantly above the equilibrium level, which of the following statements accurately analyzes the state of the economy at this point?

Analyzing an Economy with High Unemployment

In the WS-PS model, a disequilibrium where the wage demanded by workers exceeds the wage offered by firms is primarily caused by a failure of coordination within individual firms, such as the HR department setting wages that the marketing department cannot support with its pricing strategy.

Explaining Disequilibrium in the Labor Market

In a model where one curve represents the real wage required to motivate workers at different levels of employment (the wage-setting curve) and another curve represents the real wage that results from firms' profit-maximizing pricing decisions (the price-setting curve), match each employment scenario to its corresponding outcome.

Analyzing the Source of Economic Inconsistency

In a labor market model, when the real wage required to secure adequate worker effort is inconsistent with the real wage that results from firms' profit-maximizing price levels, the economy is in a state of ____.

An economy is currently operating at a level of employment higher than its stable equilibrium point. Arrange the following statements to describe the logical sequence of conditions that characterize this state of disequilibrium.

Analyzing a Policy Shock in the Labor Market

Analyzing Labor Market Disequilibrium

Adjustment Mechanism from High Employment Disequilibrium in the WS-PS Model