Use the figure below to answer the following question.

Figure 26.3.4
-If real GDP is greater than potential GDP,we would expect
A)the money wage rate to fall.
B)the money wage rate to rise.
C)potential GDP to increase.
D)potential GDP to decrease.
E)A and C.

Question

Use the figure below to answer the following question.
  
Figure 26.3.4
-If real GDP is greater than potential GDP,we would expect
A)the money wage rate to fall. 
B)the money wage rate to rise. 
C)potential GDP to increase. 
D)potential GDP to decrease. 
E)A and C.

Quizplus · Accepted Answer

When real GDP is greater than potential GDP, it indicates an economy operating above its capacity, leading to upward pressure on wages as firms compete for scarce labor resources.

Use the Figure Below to Answer the Following Question