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The supply and demand model is a powerful tool that can be used to understand the behaviour of complex economic systems.

The basic idea is simple: as prices for goods and services rise, consumers will buy less of them. This leads producers to produce more, which in turn lowers prices until equilibrium is reached. In this blog post, we explore how aggregate demand changes with a fall in labour costs. Suppose there’s an economy where employers are facing increasing costs for their workforce-related expenses (e.g., healthcare).

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To avoid going out of business they need to pay higher wages so they cut back on hiring new workers or give current employees fewer hours per week–thus lowering employment levels across the board. As these jobs become scarcer it becomes harder for those looking for work to find a job and there is increased competition among the few available jobs.

The supply and demand model states that as prices rise, consumers will buy less of them. As employers are faced with increasing costs they need to pay higher wages so they cut back on hiring new workers or give current employees fewer hours per week–thus lowering employment levels across the board (this number would be hypothetical). 

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