If the price level rises above what was expected and nominal wages are fixed, then there is less room for the profit the company made on the previous sale to rise, which would create a need for the company to cut back on wages for those that remain. This would be a deflationary effect that would hurt the company’s financial standing.
Since the price level is fixed at the current price level, and nominal wages are fixed, any change in price can’t increase the profit the company earned from the previous sale. The company won’t be able to increase wages for those that remain, which hurts them financially.
What happens when the company starts cutting back on wages for those that remain is that the price level rises, and nominal wages fall. The company loses money because there are too many workers who are less productive than what is needed to meet the company’s needs. This is exactly what happened when the company started cutting back on wages for those that remain. We only have to look at the US to see the consequences of this.
In the US, the government has the power to raise the minimum wage by an amount that affects the entire country. If the government raised the minimum wage to $7.25 per hour, all the workers would be affected. The minimum wage is a tool the government uses to raise prices so that the entire government budget is covered.
Although I have not been able to determine exactly how much the minimum wage affects the cost of health care to the individual, it does add to the cost of labor. After all, if the government is paying minimum wage, then labor will be cheaper.
If we had a little more patience and focus on building up the economy, then it would be easier for the government to do everything the state did to make sure workers had a decent wage, but it would also be easier for the government to do everything.
Because we can’t really know what that will be until we build the economy, we will also need to pay attention to what will happen to the minimum wage. One thing that the minimum wage does is increase the supply of labor by increasing the number of workers in a given area, making it easier for companies and individuals to hire workers.
The government is expected to increase the supply of labor to compensate for increased demand. But if the minimum wage rises too high, then the government will have to lower the price of labor to make up for the demand. But as the supply and demand of labor rises, the cost of labor will decrease, and if the supply of labor rises and the demand of labor falls too, then wages will fall and the government will have to raise the minimum wage again.
But how can this happen when the price level and wage are fixed? Well, that’s because the government has to do something to stimulate the economy. As the government increases the supply of labor, it increases the demand for labor, and as it increases the demand for labor it will have to increase the price of labor. When companies and individuals hire workers, they will need to pay more money.
This is where inflation (aka. price inflation) comes into play. If the price level increases and wages fall then more people will have to get a job if they are unwilling to pay a higher wage.