Equation 2.2 in Section 2.2 .1 shows that firms set prices as a mark up over unit
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Equation 2.2 in Section 2.2 .1 shows that firms set prices as a mark up over unit labour costs. Use this equation to show the relationship between wage growth and price growth in the economy. What assumptions do we have to make for wage changes to translate one-for-one into price changes? In this case, how will a rise in wages impact on a firm's profit margin?
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Macroeconomics Institutions Instability And The Financial System
ISBN: 9780199655793
1st Edition
Authors: Wendy Carlin, David Soskice
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