In the fooling model's labor market diagram, from an initial intersection point of the labor supply and demand curves, tracing "southwest" down the labor supply curve shows
A) what happens to real wages and employment when aggregate demand expands.
B) what happens to real wages and employment when aggregate demand contracts.
C) what workers think is happening to real wages if an aggregate demand contraction fools them.
D) what firms think is happening to real wages if an aggregate demand expansion fools them.
C
You might also like to view...
Tradeoffs involve an exchange of one thing for another because resources are limited and can be used in different ways
Indicate whether the statement is true or false
The figure above illustrates that if this country wishes to have F2 - F1 additional food by moving from point A to point B, it will
A) have to find additional workers, because the country already is operating on its production possibilities frontier. B) be unable to do so until additional technological progress is made. C) have to sacrifice C1 - C2 clothing in order to free the resources necessary to produce the additional food. D) require that all the unemployed resources in the country be put to work.