Nominal Wages in the Keynesian Model The Keynesian model is essentially a short run economic model. The first step in describing the effect of changes in the nominal wage rate in the context of the Keynesian model (in this case an increase in the nominal wage rate) is to discuss an example of what may cause such a change.
Nominal wages are the actual dollar amount earned by workers. Real wages are the value of those dollars and are determined in part by the price level. If the price level falls in an economy and nominal wages remain the same, real wages have risen. This is due to the fact that at the lower prices, each dollar of wages earned can buy more or b
7 
)
= 452
= 2 (250 words per page)
