If the money wage rate rises and potential GDP remains the same, ...

[bclement10]

If the money wage rate rises and potential GDP remains the same, does the LAS curve or the SAS curve shift or is there a movement along the LAS curve or the SAS curve?
 
  What will be an ideal response?

Question 2

With regard to transition economies what is meant by shock therapy?
 
  What will be an ideal response?

[uniquea123]

Answer to Question 1

If the money wage rate rises and potential GDP remains the same there is a decrease in short-run aggregate supply and no change in long-run aggregate supply. The SAS curve shifts leftward and the LAS curve is unchanged.

Answer to Question 2

Shock therapy is an approach to transition from socialism to market capitalism that advocates rapid deregulation of prices, liberalization of trade, and privatization.

[bclement10]

TYSM

[rachel]

Gracias!