When there is a recessionary gap, wage rate increases will ______, the rate of increase in costs and prices will ____ and the AS curve will _____.

Question

Quizplus · Accepted Answer

During a recessionary gap, wage rates typically decline due to lower demand for labor, leading to a fall in the rate of increase in costs and prices. Consequently, the aggregate supply (AS) curve will shift down, indicating an increase in overall supply at each price level.

When There Is a Recessionary Gap, Wage Rate Increases Will