The country of Stanley is at an above- full employment equilibrium. Which of the following events will return Stanley to full- employment?
A) an increase in the quantity of money
B) an increase in the money wage rate
C) an increase in government expenditures
D) a decrease in the interest rate

Question

Quizplus · Accepted Answer

An increase in the money wage rate will increase production costs, leading to a decrease in aggregate supply, which can help reduce the output back to full-employment levels from an above-full employment equilibrium.

The Country of Stanley Is at an Above- Full Employment