Suppose we wish to examine the determinants of the equilibrium real wage and the equilibrium level of employment. In a graph with the real wage on the vertical axis, and the level of employment on the horizontal axis, the price- setting equation will now be:
A) a horizontal line.
B) a downward sloping line.
C) kinked at the natural rate of unemployment.
D) an upward sloping line.
E) a vertical line.
Correct Answer:
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