Reply To: Prices of Services and Economic Growth


Sorry for my imprecision. Yes, the PPM would be rising not falling and yes, nominal wages, not real.

No, real wages would tend to rise as nominal wages fell more slowly than prices of output. Capital goods prices would be falling more than the prices of output. like the computer industry. The price of a massage is not the same as the wage of the masseur. The price of the massage must cover the prices of all the inputs used to produce it. The prices of more specific factors of production will adjust more to changes in the price of output than the prices of less specific factors.