Author Question: If the money wage rate is constant and the price level increases, what happens to the real wage ... (Read 132 times)

sdfghj · **on:** Jun 29, 2018

If the money wage rate is constant and the price level increases, what happens to the real wage rate, firms' profits, and the aggregate quantity supplied?

What will be an ideal response?

Question 2

Price ceilings in the U.S. on retail gasoline sales in the 1970s caused

A) massive and prolonged shortages.
B) increased advertising of gasoline.
C) longer hours of operation at most service stations.
D) poor people to be assured of an adequate supply of gasoline.

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

Answer to Question 1

The real wage rate falls. Because the price level has increased and money wage rates are constant while real wage rates are lower, firms' profits increase. As a result, the aggregate quantity of goods and services supplied increases.

Answer to Question 2

A