The country of Stanley is at an above-full-employment equilibrium. Which of the following events will return Stanley to full employment?
A) an increase in government expenditures
B) a decrease in the interest rate
C) an increase in the money wage rate
D) an increase in the quantity of money

Question

Quizplus · Accepted Answer

An increase in the money wage rate would increase production costs for businesses, leading to a decrease in the supply of goods and services. This adjustment would help lower the demand for labor, moving the economy back towards full employment by reducing inflationary pressures associated with an above-full-employment equilibrium.

The Country of Stanley Is at an Above-Full-Employment Equilibrium