For this question, assume expectations of P and A are correct. Now suppose that there is a 3% reduction in A. Given this information, which of the following will occur?

A) The PS relation will shift up by 2%.
B) The WS relation will shift down by less than 2%.
C) The WS relation will shift down by 2%.
D) There will be no change in the real wage.


C

Economics

You might also like to view...

The reliability of a study using multiple regression analysis depends on all of the following with the exception of

A) omitted variable bias. B) errors-in-variables. C) presence of homoskedasticity in the error term. D) external validity.

Economics

Melissa purchases shares in a government bond mutual fund. Is this included in the aggregate demand component "Investment"?

a. Yes, if it is a domestic mutual fund. b. Yes, if the purchase is made out of current income. c. No, unless the funds are deposited in a domestic financial institution. d. No, it would never be included.

Economics

Which of the following groups believes that people will realize what the government is attempting to do and take action to offset government policy?

A. Modern Keynesians. B. New classical economists. C. Supply-siders. D. Marxists.

Economics

The most important function of money is when money is used as a

A. medium of exchange. B. standard of deferred payment. C. store of value. D. unit of accounting.

Economics