Figure 17-1
-In the Friedman "Fooling Model" a ________ causes the labor supply curve to shift, and in the figure above, if the initial equilibrium is at point C then, the new level of price expectations, POe is ________ than the initial level of Pe.
A) change in the money supply; less than
B) change in real wages; less than
C) change in nominal wages; greater than
D) change in price expectations; greater than

Question

Figure 17-1 
-In the Friedman "Fooling Model" a ________ causes the labor supply curve to shift, and in the figure above, if the initial equilibrium is at point C then, the new level of price expectations, POe is ________ than the initial level of Pe.
A) change in the money supply; less than 
B) change in real wages; less than 
C) change in nominal wages; greater than 
D) change in price expectations; greater than

Quizplus · Accepted Answer

According to the Fooling Model, a change in price expectations will cause the labor supply curve to shift. If the initial equilibrium is at point C, the new level of price expectations POe will be greater than the initial level of Pe. Therefore, the correct answer is D, a change in price expectation greater than.

Figure 17-1 -In the Friedman "Fooling Model" a ________ Causes the Labor