ABSTRACT
The assumption of a given general price level or a given aggregate demand is totally unfounded. We know only too well that in the course of the business cycle both magnitudes are subject to violent swings. Why then should we assume that they remain unaltered in the aftermath of a wage reduction? If, however, we reject these assumptions a quite new theoretical construction is required in order to enable us to appreciate the consequences of changes in money wages. We shall deal with this problem in the next section.
