Figure 7-5

-In Figure 7-5 above,at point F,the real wage is ________ its equilibrium value,leading to changes in the nominal wage that ________.

Question

Figure 7-5
 
-In Figure 7-5 above,at point F,the real wage is ________ its equilibrium value,leading to changes in the nominal wage that ________.

Quizplus · Accepted Answer

At point F, the real wage is above its equilibrium value, meaning that labor is relatively expensive and firms are not willing to hire as much. This results in a surplus of labor, which puts downward pressure on the nominal wage. In order to clear the labor market, the nominal wage must fall, which means that the short-run aggregate supply curve (SAS₃) shifts downward. This is illustrated by choice D.

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