Question

If an economy has aggregate price levels that are increasing, but the wage rate stays the same because of downward wage stickiness, what would be the economic consequences?

New businesses would enter the economy, hire employees and as a consequence the quantity of real GDP supplied would increase.

Business would fire some employees as labor becomes too expensive and the quantity of real GDP supplied would decrease.

Business would need to hire more employees and the quantity of real GDP supplied would increase.

Which of the following things are taken into consideration when using the aggregate demand-aggregate supply (AD-AS) model to illustrate growth and changes in the economy?

The speed of change from expansions to recessions.

Social capital and goodwill.

Increased labor productivity.

How does an economist depict cyclical unemployment on an aggregate demand-aggregate supply (AD-AS) diagram?

By depicting how much the AD curve has moved past potential or full employment.

By depicting the duration of the recession on the diagram.

Showing how close the economy is to potential or full employment level of GDP.

In the long run, the least important cause of shifts the aggregate supply curve is

change in productivity.

change in consumer spending.

technological change.

Answer 1

Ans) the correct option is Business would fire some employees as labor becomes too expensive and the quantity of real GDP supplied would decrease.

ans) the correct option is Increased labor productivity.

ans) the correct option is Showing how close the economy is to potential or full employment level of GDP.

ans) the correct option is technological change.