Exhibit 9-1

-Refer to Exhibit 9-1.The economy is currently producing Q_1.An economist who believes wages are flexible in the downward direction would argue that

Question

Exhibit 9-1 -Refer to Exhibit 9-1.The economy is currently producing Q_1.An economist who believes wages are flexible in the downward direction would argue that

Quizplus · Accepted Answer

If wages are flexible in the downward direction, it means that as the economy moves away from full employment, employers will start reducing wages to reduce their costs. As a result, labor becomes cheaper, encouraging firms to hire more workers, and so the economy moves back towards full employment. Therefore, the economist would argue that it is likely that the economy will soon move to point A, where the labor market is in equilibrium and full employment is achieved.

Exhibit 9-1 -Refer to Exhibit 9-1.The Economy Is Currently Producing Q1.An Economist

Exhibit 9-1 -Refer to Exhibit 9-1.The Economy Is Currently Producing Q_1.An Economist