"Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes." Explain whether the previous statement is correct or incorrect
What will be an ideal response?
The statement is incorrect. It reverses the situation. Moving along the AS curve, the money wage rate is constant and so the real wage rate changes. Moving along the potential GDP line, money wage rates have adjusted to the change in the price level and so the real wage rate is constant.
You might also like to view...
Under a managed float,
a. a central bank allows the forces of supply and demand to determine the exchange rate b. a nation can have neither a trade deficit nor a trade surplus c. a nation "pegs" its price level to a foreign currency d. a nation "pegs" its price level at some fixed value e. a central bank intervenes in the foreign exchange market to stabilize its exchange rate
An important prerequisite for the price system to work is an economy-wide respect for _______ rights
Fill in the blank(s) with correct word
Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 while Acme continues to comply with the collusive agreement, then Mega's economic profit will be ________.
A. $150 B. $200 C. $100 D. $75
Explain why people might work less if the wage increases.
What will be an ideal response?