-In the above figure, the economy initially is at point A and then an increase in the quantity of money moves the economy to point D. At point D, the real wage rate has
A)fallen.
B)remained constant.
C)risen by the same percentage as the price level.
D)risen.

Question

-In the above figure, the economy initially is at point A and then an increase in the quantity of money moves the economy to point D. At point D, the real wage rate has
A)fallen. 
B)remained constant. 
C)risen by the same percentage as the price level. 
D)risen.

Quizplus · Accepted Answer

An increase in the quantity of money typically leads to higher price levels, which can reduce the real wage rate if nominal wages do not adjust immediately.

-In the Above Figure, the Economy Initially Is at Point