Refer to the following figure when answering
Figure 15.2: The Labor Market
-In the stylized DSGE model for the labor market displayed in Figure 15.2, with sticky wages, expansionary monetary policy would cause a move from ________ because ________.
A) $c \rightarrow a$ of the natural rate of unemployment
B) $b \rightarrow a$ involuntary unemployment would be zero
C) $a \rightarrow d;$ other prices would rise
D) $a \rightarrow c;$ the labor market would clear
E) $c \rightarrow e;$ real wages would rise

Question

Refer to the following figure when answering  
Figure 15.2: The Labor Market 
-In the stylized DSGE model for the labor market displayed in Figure 15.2, with sticky wages, expansionary monetary policy would cause a move from ________ because ________.
A) $c \rightarrow a$ of the natural rate of unemployment 
B) $b \rightarrow a$ involuntary unemployment would be zero 
C) $a \rightarrow d;$ other prices would rise 
D) $a \rightarrow c;$ the labor market would clear 
E) $c \rightarrow e;$ real wages would rise

Quizplus · Accepted Answer

Expansionary monetary policy typically increases aggregate demand, leading to higher prices and output. In a DSGE model with sticky wages, this can cause a movement from point $a$ to point $d$ as other prices rise, reflecting increased economic activity and employment.

Refer to the Following Figure When Answering Figure c→ac \rightarrow ac→a

Refer to the Following Figure When Answering
Figure $c \rightarrow a$