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Based on Your Understanding of the Aggregate Supply and Aggregate

Question 63

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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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The increase in minimum wage causes the ...

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