Refer to the graph given below. Suppose an economy moves from point B₃ to point C₃ because of an increase in aggregate demand.Given the scenario, which of the following is likely to occur? A)Nominal wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₃ to B₄. B)Real wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₁ to B₁. C)Nominal wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₃ to B₃. D)Nominal wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₃ to C₂.

Question

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The Answer of Refer to the graph given below. Suppose an economy moves from point B₃ to point C₃ because of an increase in aggregate demand.Given the scenario, which of the following is likely to occur? A)Nominal wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₃ to B₄. B)Real wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₁ to B₁. C)Nominal wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₃ to B₃. D)Nominal wages will rise, and profits will decrease, thereby negating the short-run stimulus to production and employment so that the economy moves from C₃ to C₂.

Refer to the Graph Given Below