If unemployment is exceptionally low, wages would be expected to _____, shifting AS to the
A) rise, right.
B) rise, left.
C) fall, right.
D) fall, left.

Question

Quizplus · Accepted Answer

When unemployment is exceptionally low, it typically leads to an increase in wages as employers compete for a smaller pool of available workers. This increase in wages raises the cost of production for companies, which can lead to a decrease in the aggregate supply (AS), shifting the AS curve to the left.

If Unemployment Is Exceptionally Low, Wages Would Be Expected to _____