On Oct 4, 7:09*pm, "Ed Huntress" wrote:

It makes it even MORE economically attractive for Tom to invest in new, more
productive equipment, so he can compete. Reducing wages then moves his
equilibrium point up for a while, and then it just reduces aggregate demand.
Individually, Tom won't notice it. But if other small businessmen do the
same thing, we'll all notice it.


But investing on more productive equipment means that Tom can employ
fewer workers. So this is not where the jobs are going to come from.

Dan


--
Ed Huntress