Were the government to decree that henceforth all wages and other input prices are to be indexed to nominal aggregate demand,this ________ "coordination failure" of the macroeconomy and ________ business cycles.
A)solves the,amplifies
B)solves the,dampens
C)creates a,amplifies
D)creates a,dampens

Question

Quizplus · Accepted Answer

Indexing wages and other input prices to nominal aggregate demand would solve the coordination failure of the macroeconomy by ensuring that all economic agents are responding to the same signal, which would dampen business cycles.

Were the Government to Decree That Henceforth All Wages and Other