* Labor Contracts: Implicit labor contracts are a term that refers to the type of agreements that are often made between employers and employees. * Career Labor Markets: The idea here is that employers adopt policies that promote...
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* Labor Contracts: Implicit labor contracts are a term that refers to the type of agreements that are often made between employers and employees. * Career Labor Markets: The idea here is that employers adopt policies that promote the long-run attachment of workers to the firm. This is important to employers because finding able workers and providing training can be expensive. In addition, employees find it in their interest to agree to such arrangements. * A Demand Shock: In the short run. The monetary policy expansion leads to a fall in interest rates which gets the multiplier process under way and output increases. Over time, the multiplier process that leads to an increase in output also leads to increases in prices. Quantity adjustments become less common and price adjustments become more common. Nevertheless, additional output is forthcoming, and after a period of several years, there are both output and price increases.
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