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Based on Your Understanding of the AS- AD Model and the IS-

question 64

Essay

Based on your understanding of the AS- AD model and the IS- LM model, graphically illustrate and explain what effect an increase in the minimum wage will have on the economy. In your graph, clearly illustrate the short- run and medium- run equilibria. Also include in your answer an explanation of the effects of this change in minimum wage on the labour market and the equilibrium real wage.


Definitions:

Customer is King

A business philosophy that emphasizes the importance of customer satisfaction and prioritizing customer needs in company decisions.

Seller's Market

A market condition characterized by a high demand for goods and services relative to supply, often leading to higher prices and quicker sales.

Value

The relevance, merit, or utility of something for someone.

Transaction-oriented Marketing

Marketing strategies focused primarily on making sales transactions rather than building long-term relationships with customers.

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