Question
Are all real shocks negative by definition? What happens if the government tries to stimulate AD during a real shock to the economy? Some companies
Are all "real shocks" negative by definition? What happens if the government tries to stimulate AD during a "real shock" to the economy?
Some companies increase their workers pay by giving raises, but others prefer to give one-time bonuses instead. Think about two steel mills facing a big two-year drop in steel demand: in one steel mill workers have received pay raises every year for five years. In another steel mill most of the pay increases have occurred through bonuses at the end of each year. Which steel mill will probably keep more jobs during the two-year downturn? Why?
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