A fall in the money wage rate shifts
A) both the SAS and LAS curves leftward.
B) the SAS curve rightward but leaves the LAS curve unchanged.
C) the LAS curve rightward but leaves the SAS curve unchanged.
D) both the SAS and LAS curves rightward.

Question

Quizplus · Accepted Answer

A fall in the money wage rate will lead to lower production costs for businesses, causing a rightward shift in the SAS curve. However, it will not affect the potential output of the economy or the natural rate of unemployment, so the LAS curve remains unchanged.

A Fall in the Money Wage Rate Shifts