Answered: The AS curve has a positive slope…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Unemployment

Section: Chapter Questions

Problem 2PA

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Question

The AS curve has a positive slope because of which set of events?

Select one:

a. Increase in the level of output and income which results in higher unemployment rate. The higher the unemployment rate, the lower the number of people employed. This results in higher nominal wage bargaining, which then results in firms charging lower prices.

b. An increase in nominal wage bargaining results in high unemployment rate, which results in higher price levels in the economy. Hence an upward sloping AS curve

c. An increase in the level of output and income, results in higher employment level and lower natural rate of unemployment. This results in high nominal wage bargaining, and firms will be forced to increase their price levels. Hence an upward sloping AS curve

d. An increase in the level of output and income, results in higher employment level, and lower rate of unemployment. This results in high nominal wage bargaining, and firms will be forced to increase their price levels. Hence an upward sloping AS curve

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