CHAPTER 29 - CHAPTER 29 Right answers 32 A rise in the...

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CHAPTER 29: Right answers: 32/ A rise in the money wage rate when the economy is at potential GDP ______. A. decreases potential GDP because the full-employment quantity of labor decreases B. decreases aggregate supply because a rise in the money wage rate increases costs, so firms employ fewer workers Your answer is correct. C. does not change potential GDP but increases real GDP along the AS curve. D. does not change aggregate supply but decreases production 33/ When the price level and the money wage rate rise by the same percentage, unemployment . When the price level rises but the money wage rate remains unchanged, unemployment ______ and the quantity of real GDP supplied ______. A. increases; increases B. decreases; increases Your answer is correct. C. decreases; decreases D. increases; decreases 34/ An economy has a recessionary gap. With no change in aggregate demand, how does the economy return to full employment? A. The money wage rate falls, aggregate supply increases, and the price level falls.
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