If self-correction causes prices to fall less than nominal wages,both output and real wages will decrease.

Name: If self-correction causes prices to fall less than nominal wages,both output and real wages will decrease.
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Question

Quizplus · Accepted Answer

If prices fall less than nominal wages, it means that real wages (wages adjusted for inflation) have increased. As a result, firms will reduce output as their costs have increased due to higher real wages. Therefore, both output and real wages will decrease.

If Self-Correction Causes Prices to Fall Less Than Nominal Wages,both