In an economy where nominal incomes adjust equally to changes in the price level, we would expect the long-run aggregate supply curve to be _____.
c. negatively sloped.
d. positively sloped.
Nominal vs Real Income:
Nominal income is the actual amount a worker gets paid for offering their resources up for production uses. Real income is nominal income that is adjusted for changes in the price level such as inflation.
Answer and Explanation: 1
If an economy where nominal income adjusts to changes in the price level, real output should be constant regardless of the price level. In...
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fromChapter 7 / Lesson 3
Understand the aggregate demand-aggregate supply model and its features. Read more about the curve shifts of this and learn the AD-AS model through an example.