All else equal, an increase in the overall price level of goods and services in the economy will lead to _____ in the quantity of labor hired and _____ in the wage rate.
A) an increase; an increase
B) a decrease; an increase
C) an increase; a decrease
D) a decrease; a decrease

Question

Quizplus · Accepted Answer

An increase in the overall price level typically leads to higher demand for goods and services, which can increase the demand for labor, leading to more labor hired and potentially higher wage rates.

All Else Equal, an Increase in the Overall Price Level