Author Question: Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, ... (Read 106 times)

jon_i · **on:** Jun 29, 2018

Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes. Explain whether the previous statement is correct or incorrect.

What will be an ideal response?

Question 2

Refer to the figure above. What is the market-wide consumer surplus when the market price of calculators is 3?

A) 600
B) 725
C) 1,000
D) 1,120

Sweetkitty24130 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The statement is incorrect. It reverses the situation. Moving along the AS curve, the money wage rate is constant and so the real wage rate changes. Moving along the potential GDP line, money wage rates have adjusted to the change in the price level and so the real wage rate is constant.

Answer to Question 2

C