An increase in the nominal wage will increase potential output.

Name: An increase in the nominal wage will increase potential output.
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Question

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An increase in nominal wage may lead to an increase in costs for firms, which can lead to higher prices and decreased demand, ultimately leading to a decrease in potential output. The impact of an increase in nominal wages on potential output depends on various factors such as the overall state of the economy, inflation, and productivity levels.

An Increase in the Nominal Wage Will Increase Potential Output