Samuelson and Solow reasoned that when aggregate demand was high, unemployment was
A)low, so there was upward pressure on wages and prices.
B)low, so there was downward pressure on wages and prices.
C)high, so there was upward pressure on wages and prices.
D)high, so there was downward pressure on wages and prices.

Question

Quizplus · Accepted Answer

Samuelson and Solow's reasoning aligns with basic economic principles: when aggregate demand is high, unemployment tends to be low because businesses hire more workers to meet the increased demand. This, in turn, puts upward pressure on wages as employers compete for labor, and subsequently, prices may rise due to increased labor costs and higher demand for goods and services.

Samuelson and Solow Reasoned That When Aggregate Demand Was High