... wage is often above the market equilibrium. This is a form of direct government intervention to regulate the economy for macroeconomic stability. This is a policy which the monetarist economists do not endorse. However, to the Keynesian economists, it is acceptable to have minimum wages imposed if they will trigger a multiplier effect and encourage growth and expansion, especially where there is under consumption or the economy is operating below the production possibility frontier (PPF). The government determines the minimum wage through an annual survey which links it to the living wage, and the Retail Price Index (RTP). The real wage or the purchasing power of workers is determined through the study of a 'basket' of goods, selected at random. This basket consists of items that an average family consumes for their living, and which are weighted for their importance. Inflation of this 'basket' of goods is taken into account. From the ...

See this essay or coursework document in full right now