HC Deb 05 March 1985 vol 74 cc491-2W
Mr. Gould

asked the Chancellor of the Exchequer (1) what effect an increase in the money supply has on the real product wage for the purposes of his analysis of the relationship between employment and wages;

(2) what effect an increase in interest rates has on the real product wage for the purposes of his analysis of the relationship between employment and wages;

(3) what effect an increase in the exchange rate has on the real product wage for the purposes of his analysis of the relationship between employment and wages.

Mr. Peter Rees

The analysis of the relationship between employment and wages involved several simulations of the effects of a reduction in wages under different assumptions about monetary and fiscal policy. Estimates of the effect on the real product wage of an increase in the money supply, interest rates or the exchange rate were not made in the course of this analysis and would depend on the particular assumptions adopted.