Intro 2 Econ, unemployment question The reserve army of labor model of unemploym

Question

Intro 2 Econ, unemployment question The reserve army of labor model of unemployment starts from the assumption that the labor market is not like other markets. Since most people need employment to survive, the supply of labor is assumed to be constant. Wages are understood to be determined by bargaining between employers and workers, not by the process of adjusting toward market equilibrium. Why does unemployment exist, according to this model? Why doesn't the process of negotiating pay lead to steady, full employment? Answer the following three questions to describe, in formal mathematical language, the relationship between unemployment and wages. Which is the independent variable? Which is the dependent variable? Is it a direct or inverse relationship?

Explanation / Answer

The unemployment exit due to improper wages given to the labours. The process cannot be negotiated due to less savings and more spendings by the company.In case of full employment the spendings is more so process cannot be negotiated.

The independent variable is unemployment. The dependnet variable is wages as it depends upon market value. It is a inverse relationship between unemployment and wages. In caseof unemployment wages decreases.

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