Exhibit 20A-2 Macro AD/AS Models
As shown in Panel (b) of Exhibit 20A-2, assume the economy adopts a classical nonintervention policy. Which of the following would cause the economy to self-correct?
A) Competition among firms for workers increases the nominal wage and SRAS shifts rightward.
B) Long-run equilibrium will be established at Y 1 and P 2 .
C) Long-run equilibrium will be established at Y p and P 3 .
D) Competition among unemployed workers decreases nominal wages and SRAS shifts rightward.
Correct Answer:
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