Moving along the potential GDP line,when the price level changes,the
I.real wage rate stays at the full-employment equilibrium level.
Ii.money wage rate changes by the same percentage.
Iii.money prices of non-labor resources change by the same percentage.
A)i only
B)ii only
C)iii only
D)i and ii
E)i,ii,and iii

Question

Quizplus · Accepted Answer

All three statements are correct: the real wage rate remains constant at full employment, and both the money wage rate and the money prices of non-labor resources adjust proportionally to changes in the price level to maintain equilibrium.

Moving Along the Potential GDP Line,when the Price Level Changes,the