The weakening of the economy is likely to have a proportionally bigger impact on employment than in the recent recession, as real wages and shorter working hours may adjust less this time.

The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, and regulated or contracted prices.

Since wages cannot readily adjust low enough for aggregate supply to shift outward and improve total output, the government must intervene to accomplish this result.

But instead of continuing to rise, real wages - that is, wages adjusted for inflation - have fallen back and are now below their 1986 levels.

John B. Taylor expanded on Fischer's work and found that monetary policy could have long lasting effects-even after wages and prices had adjusted.

In particular, the real wage will adjust spontaneously so as to prevent the emergence of excess supply in the labour market.

And while wages and prices would presumably adjust fairly quickly to more realistic levels, the initial effect would be more unemployment in East Germany and more emigration.

Real hourly earnings - that is, wages adjusted for inflation - fell this year for 80 percent of all workers, according to new data from the Bureau of Labor Statistics.

Now they can be and they are, and wages are adjusting accordingly.

According to their view, the United States must reduce its wages and working standards to adjust to the global economy.