Macroeconomic Stabilisation in Regards to Labor Market - Essay Example
139 – 140). Aside from believing that there is a perfect labour market among the firms, employers and employees, classical economists assumed that equilibrium within the labour market is possible because of the presence of monetary wages or wage-price flexibility that could make supply and demand curve adjust with the changes in labour markets in order to remove or eliminate the presence of excessive supply and demand for labour (Rossana, 2011, p. 370; Gupta, 2008, p. 273; Ahiakpor, 2003, p. 160). Given that there is profit maximization or profit seeking behaviour on the part of the local business group; demand for labour is often represented by a downward-sloping curve since these companies are less likely to employ a lot of high-paid employees as compared to low-paid employees (Rossana, 2011, p. 370). On the other hand, the aggregate supply curve for labour is represented by a vertical curve (Rossana, 2011, p. 371).
