If the money wage rate falls, then
A)the SAS curve shifts rightward.
B)firms hire less labour.
C)the AD curve shifts rightward.
D)the LAS curve shifts rightward.
E)the LAS curve and the SAS curve shift rightward.

Question

Quizplus · Accepted Answer

When the money wage rate falls, the cost of production for firms decreases. This makes it cheaper for firms to produce goods and services, leading to an increase in the supply of goods and services at every price level. As a result, the Short-Run Aggregate Supply (SAS) curve shifts rightward, indicating an increase in the total production of the economy in the short run.

If the Money Wage Rate Falls, Then