If the level of output is above natural real GDP 1workers and firms will strike
ID: 1109565 • Letter: I
Question
If the level of output is above natural real GDP
1workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve right.
2workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left.
3workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve right.
4workers and firms will strike bargains for lower wages. This decrease in wages shifts the short-run aggregate supply curve left.
Explanation / Answer
Answer
2. workers and firms will strike bargains for higher wages. This increase in wages shifts the short-run aggregate supply curve left
The above natural rate of output will increase wages as the more than full resources are used and everyone have job so the worker will bargain for higher wages and the firms shupply curve shifts to theleft.