Based on Your Understanding of the Aggregate Supply and Aggregate

question 74

Essay

Based on your understanding of the aggregate supply and aggregate demand 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 graphs,clearly illustrate the short-run and medium-run equilibria.Also include in your answer an explanation of the effects of this change in the minimum wage on the labor market and the equilibrium real wage.

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Definitions:

Accelerate Heartbeat

The increase in the speed of the heart rate.

Endocrine Gland

A gland that secretes hormones directly into the bloodstream to regulate the body's growth, metabolism, and development.

Body Growth

The increase in physical size, strength, and complexity of an organism over time.

Adrenal Glands

Endocrine glands located above the kidneys that produce various hormones, including adrenaline and cortisol, which help the body respond to stress.