If the price level falls and the money wage rate does not change, some firms _____ and there is _____.
A. start up; a rightward shift of the aggregate supply curve
B. shut down; a leftward shift of the aggregate supply curve
C. shut down; a decrease in the quantity of real GDP supplied
D. start up; an increase in potential GDP
E. shut down; a decrease in potential GDP
Money wage and real wage
The money wage rate is the wage rate measured in current year price and the real wage rate is the wage rate measured in base year price.
Answer and Explanation: 1
Ans: shut down; a decrease in the quantity of real GDP supplied.
If the money wage rate does not change, a decrease in the price level will increase...
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fromChapter 5 / Lesson 12
Learn what real wage is and how to calculate real wage using the real wage formulas. See examples of real wage calculations, and understand the differences between nominal wage and real wage.