Figure 8-5
-In the figure above, from point B suppose the nominal wage rises by 5 percent while aggregate demand remains constant. As a result we
A) move to point C.
B) move to point D.
C) move to point F.
D) move to point A.
E) remain at point B.

Question

Figure 8-5 
-In the figure above, from point B suppose the nominal wage rises by 5 percent while aggregate demand remains constant. As a result we
A) move to point C. 
B) move to point D. 
C) move to point F. 
D) move to point A. 
E) remain at point B.

Quizplus · Accepted Answer

When nominal wages rise while aggregate demand remains constant, the short-run aggregate supply curve shifts leftward, leading to a higher price level and lower output, which corresponds to a movement to point D.

Figure 8-5 -In the Figure Above, from Point B Suppose the Nominal