When wages rise 15 percent,under which of the following circumstances will short-run aggregate supply increase?
A)if productivity is stable
B)if productivity increases by 10 percent
C)if productivity increases by 15 percent
D)if productivity increases by 20 percent

Question

Quizplus · Accepted Answer

Short-run aggregate supply will increase if productivity increases by more than the rise in wages, which is 15 percent. A 20 percent increase in productivity would offset the wage increase and lead to an increase in aggregate supply.

When Wages Rise 15 Percent,under Which of the Following Circumstances