Optimism Imagine that the economy is in long-run equilibrium. Then, perhaps beca

Question

Optimism Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved intenational relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time. Refer to Optimism. What happens to the expected price level and what's the result for wage bargaining? O a. The expected price level rises. Bargains are struck for lower wages O b The expected price level falls Bargains are struck for lower wages ?C. The expected price level rises Bargains are struck for higher wages. O d. The expected price level falls. Bargains are struck for higher wages.

Explanation / Answer

Solution: The expected price level rises. Bargains are struck for higher wages

Explanation: . In the long run, the change in price expectations created by pessimism shifts right the short-run aggregate supply and as a result the expected price level increases and bargains are struck for higher wages

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.