Use the following to answer questions:
-(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.If the economy is at point E,nominal wages will _____,and the short-run aggregate supply curve will shift _____ until actual output is _____ potential output.
A) increase;left;equal to
B) increase;right;greater than
C) decrease;right;equal to
D) decrease;right;less than

Question

Use the following to answer questions: 
-(Figure: Aggregate Supply)Refer to Figure: Aggregate Supply.If the economy is at point E,nominal wages will _____,and the short-run aggregate supply curve will shift _____ until actual output is _____ potential output.
A) increase;left;equal to 
B) increase;right;greater than 
C) decrease;right;equal to 
D) decrease;right;less than

Quizplus · Accepted Answer

If the economy is at point E, where actual output is greater than potential output, nominal wages will increase due to higher demand for labor. This will cause the short-run aggregate supply curve to shift left until actual output equals potential output.

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