Figure 7-5

-In Figure 7-5 above,at point C,the real wage is ________ its equilibrium value,leading to changes in the nominal wage that ________.
A)above,shift AD₁ back to AD₀
B)below,shift AD₁ further to the right
C)below,shift SAS₀ upward
D)above,shift SAS₀ downward

Question

Figure 7-5
 
-In Figure 7-5 above,at point C,the real wage is ________ its equilibrium value,leading to changes in the nominal wage that ________.
A)above,shift AD₁ back to AD₀ 
B)below,shift AD₁ further to the right 
C)below,shift SAS₀ upward 
D)above,shift SAS₀ downward

Quizplus · Accepted Answer

At point C, the real wage is below its equilibrium value, which leads to an increase in nominal wages as firms compete for scarce labor, causing the short-run aggregate supply curve (SAS) to shift upward.

Figure 7-5 -In Figure 7-5 Above,at Point C,the Real Wage Is ________