Suppose the price level, the money wage, and the price of all other resources rise by 10 percent. This set of changes leads to
A) an upward movement along the SAS curve.
B) a downward movement along the LAS curve.
C) a leftward shift of the LAS curve.
D) an upward movement along the LAS curve.

Question

Quizplus · Accepted Answer

An upward movement along the LAS curve occurs because the LAS curve represents the long-run aggregate supply, which is not affected by changes in the price level or wages, as these are nominal variables. The real output remains unchanged, but the price level increases.

Suppose the Price Level, the Money Wage, and the Price