If workers push for wages that are beyond what productivity gains can justify ________.
A)a positive output gap ensues which will lead to lower unemployment if the Federal Reserve does not act
B)a temporary negative supply shock ensues driving up prices
C)and the Federal Reserve eases monetary policy aimed at increasing aggregate demand to counter the negative supply shock,the inflation rate will decrease
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

If workers push for wages that are beyond what productivity gains can justify, it may lead to a temporary negative supply shock. This is because the production costs will increase, which can lead to a decrease in the supply of goods and services or higher prices. The other options (A and C) are not necessarily true in this scenario. A positive output gap (A) does not necessarily ensue, and the Federal Reserve easing monetary policy (C) may not always be the response to a negative supply shock.

If Workers Push for Wages That Are Beyond What Productivity