Which of the following is true about real and nominal wages?
Changes in the nominal wage will be the same as changes in the real wage only if the price
level is constant.
The expected price level is significant because
irms and resource owners make long-term agreements based on the expected price level
If the economy were at its potential output level, which of the following would not be true?
Frictional unemployment would be zero.
In constructing the short-run aggregate supply curve, we define the short run as the period in which
the costs of some resources are fixed
Wage agreements may cause costs to be __________ flexible than prices so that __________ in the price level cause __________ in aggregate quantity supplied
less; decreases; increases
An expansionary gap is equal to
actual short-run output minus potential output
In long-run equilibrium,
actual output must equal potential output
If a contractionary gap exists and resource prices are not flexible downward, the short-run aggregate supply
not shift rightward to return the economy to its potential output
Which of the following would shift the LRAS curve to the left?
a civil war