ABSTRACT
In the chapters to this point we assumed that the goods market was always in equilibrium, in the sense that the desired aggregate demand for goods was always equal to the desired aggregate supply of goods. In the models presented so far, however, the labour market was not necessarily in equilibrium. In general we allowed the desired real supply of labour to exceed the desired real demand for labour, thus accommodating some involuntary unemployment. In these models then the goods market ‘cleared’, but not so the labour market.
