Multiple Choice
Suppose the economy is experiencing an expansionary gap.Which of the following will occur in the long run?
A) Workers will negotiate nominal wage increases that will shift the SRAS curve to the left.
B) Workers will negotiate nominal wage increases that will shift the SRAS curve to the right.
C) Employers will negotiate lower nominal wages, relative to prices, that will shift the SRAS curve to the right.
D) Employers will negotiate lower nominal wages, relative to prices, that will shift the SRAS curve to the left.
Correct Answer:
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