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Figure: AD-AS Model II
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If nominal wages fall, in the short run the _____ curve will shift to the _____.
A) SRAS; left
B) SRAS; right
C) LRAS; right
D) AD; right

Question

Use the following to answer questions:
Figure: AD-AS Model II 
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If nominal wages fall, in the short run the _____ curve will shift to the _____.
A) SRAS; left 
B) SRAS; right 
C) LRAS; right 
D) AD; right

Quizplus · Accepted Answer

When nominal wages fall, the cost of production decreases, leading to an increase in the quantity of goods and services supplied at every price level. This is represented by a rightward shift of the Short-Run Aggregate Supply (SRAS) curve.

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