In 2008 the money wage rate in Ireland increased by 4 percent while the price level increased by 8 percent. As a result, Irelandʹs
A) short-run and long-run aggregate supply curves shifted rightward.
B) long-run aggregate supply curve shifted rightward.
C) short-run aggregate supply curve shifted rightward.
D) short-run aggregate supply curve shifted leftward.

Question

Quizplus · Accepted Answer

The increase in the money wage rate will shift the short-run aggregate supply curve to the left, while the increase in the price level will shift the short-run aggregate supply curve to the right. The net effect is a shift to the right in the short-run aggregate supply curve.

In 2008 the Money Wage Rate in Ireland Increased by 4