Pakora99
Badges: 14
Rep:
?
#1
Report Thread starter 3 years ago
#1
Does an increase in productivity lead to an increase in wages?

If an economy is driven by exports and has a lot of export growth, assuming ceteris paribus would and they do not use any sort of monetary or fiscal policy would this economy fall into deflation due to lack of demand pull and cost push inflation eventually?
0
reply
Pakora99
Badges: 14
Rep:
?
#2
Report Thread starter 3 years ago
#2
bump
0
reply
humayun.h
Badges: 12
Rep:
?
#3
Report 3 years ago
#3
Well an increase in productivity is usually caused by an increase in wages cos of the motivation increase, but if productivity was to increase, it would cause total costs to fall so profit increases, it would then be the firm's choice on how to use this increase in profit, it would likely be used to increase wages tho.
1
reply
humayun.h
Badges: 12
Rep:
?
#4
Report 3 years ago
#4
Why would an increase in exports lead to an increase in costs, or a decrease in demand within the country?
0
reply
hannah00
Badges: 18
Rep:
?
#5
Report 3 years ago
#5
in perfect competition, firms hire workers until real wage = mpl.

real wages do not change in the long term, because workers and employers can adjust wages
0
reply
Pakora99
Badges: 14
Rep:
?
#6
Report Thread starter 3 years ago
#6
(Original post by humayun.h)
Why would an increase in exports lead to an increase in costs, or a decrease in demand within the country?
When you increase exports there is no demand pull inflation so if an economy is export driven like some Asian countries and say the marginal propensity to consume is low
could deflation eventually occur?
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Are you tempted to change your firm university choice on A-level results day?

Yes, I'll try and go to a uni higher up the league tables (10)
34.48%
Yes, there is a uni that I prefer and I'll fit in better (2)
6.9%
No I am happy with my choice (16)
55.17%
I'm using Clearing when I have my exam results (1)
3.45%

Watched Threads

View All
Latest
My Feed