Question 4

a) For countries like Australia, give 3 reasons why wages have not risen much in recent times. (3 marks)

b) Give reasons why nominal wages may start rising faster in 2022 now that inflation is increasing due to the recent supply shocks (eg oil prices) and demand shocks (fiscal and monetary stimulus)? (4 marks)

c) Will real wages start rising? If they don't, should the central banks be raising the interest rate? Explain why. (3 marks)