??Exhibit 16A-2 Macro AD/AS Models
?
As shown in Panel (a) of Exhibit 16A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?
A. ?Competition among firms for workers increases the nominal wage and SRAS shifts rightward.
B. ?Long-run equilibrium will be established at Y1 and P2.
C. ?Long-run equilibrium will be established at Y1 and P3.
D. ?Competition among unemployed workers decreases nominal wages and SRAS shifts rightward.
Answer: D
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