Web Links

• p. 222: Go to http://stats.bls.gov/ to find out how fast wages are adjusting, and then click on "Employment Cost Index."
• p. 230: Go to http://research.stlouisfed.org/fred/ to learn about how the price level has changed during recent years, and then click on "Gross Domestic Product and Components" (for GDP deflators) or "Consumer Price Indexes."

Issues and Applications Web Resources:

• To read a Federal Reserve Bank of Cleveland survey of issues associated with deflation, go to http://www.clevelandfed.org/ccca/press/annual02.cfm and click on "2002 Annual Report."
• For a look at the Japanese and Chinese experiences with deflation from Japan’s perspective, go to http://www.rieti.go.jp/en/china/03030701.html.

Wages, Productivity, and Aggregate Supply
How much firms pay their employees and the productivity of those employees influence firms' total planned production, so changes in these factors affect the position of the aggregate supply curve. This application gives you the opportunity to examine recent trends in measures of the overall wages and productivity of workers.

     Title: Bureau of Labor Statistics: Economy at a Glance

     Navigation: Use http://www.bls.gov/mfp/ to visit the Bureau of Labor Statistics Web site.

Application
Perform the indicated operations, and answer the following questions.

1. Click on Employment Costs, and then click on Employee Cost Index. What are the recent trends in wages and salaries and in benefits? In the long run, how should these trends be related to movements in the overall price level?

2. Back up to the home page, and click on Productivity and Costs and then PDF next to "Economic News Releases: Productivity and Costs." How has labor productivity behaved recently? What does this imply for the long-run aggregate supply curve?

3. Back up to U.S. Economy at a Glance, and now click on National Employment, and then PDF next to "Economic News Releases: Employment Situation Summary." Does it appear that the U.S. economy is currently in a long-run growth equilibrium?