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Macroeconomics

13th Edition
Roger A. Arnold
Publisher: Cengage Learning
ISBN: 9781337617390

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BuyFindarrow_forward

Macroeconomics

13th Edition
Roger A. Arnold
Publisher: Cengage Learning
ISBN: 9781337617390
Chapter 8, Problem 4WNG
Textbook Problem
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In the following figure, which part is representative of each of the following?

  1. a. A decrease in wage rates
  2. b. An increase in the price level
  3. c. A beneficial supply shock
  4. d. An increase in the price of nonlabor inputs

Chapter 8, Problem 4WNG, In the following figure, which part is representative of each of the following? a. A decrease in

(a)

To determine

Estimate the decrease in wage rates.

Explanation of Solution

In an economy, decrease in wage rate causes an increase in the short-run aggregate supply in the market. Thus, increase in the short-run aggregate supply leads to decrease in the price level and increase in the real GDP.

(b)

To determine

Explain an increase in the price level.

(c)

To determine

Explain a beneficial supply shock.

(d)

To determine

Explain an increase in the price of non-labor input.

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