If output exceeds its full-employment level,the wage rate will eventually fall,causing a drop in the price level and a drop in real GDP until full employment is restored.

Question

Quizplus · Accepted Answer

When output exceeds its full-employment level, the wage rate is likely to rise due to increased demand for labor, leading to higher production costs and potentially higher price levels, not a drop.

If Output Exceeds Its Full-Employment Level,the Wage Rate Will Eventually