According to real business cycle theorists,if the long-run aggregate supply (LRAS)curve shifts to the left,Real GDP __________,the price level __________,the demand for labor __________,money wages __________,real wages __________,and workers choose to work __________.

Question

Quizplus · Accepted Answer

According to real business cycle theorists, a leftward shift in the LRAS curve indicates a decrease in potential output due to factors such as a decrease in productivity or a decrease in the availability of resources. Therefore, real GDP falls. As the LRAS curve shifts left, the price level rises, resulting in a decrease in the demand for labor. As a result, money wages fall due to the excess supply of labor. Even though money wages fall, the decrease in prices is proportionally larger, resulting in a fall in real wages. In response, workers choose to work less. Therefore, the correct answer is C.

According to Real Business Cycle Theorists,if the Long-Run Aggregate Supply