Which of the following will most likely result from an unexpected increase in prices that decreases real wages and resource prices?
A) a decrease in unemployment
B) an increase in unemployment
C) a decrease in the nominal interest rate
D) a decrease in aggregate supply and real output

Question

Quizplus · Accepted Answer

An unexpected increase in prices that decreases real wages and resource prices typically leads to a decrease in unemployment because firms can hire more workers at lower real wage costs, thus increasing employment.

Which of the Following Will Most Likely Result from an Unexpected