Everything else held constant,when output is ________ the natural rate level,wages will begin to ________,decreasing short-run aggregate supply.
A)above;fall
B)above;rise
C)below;fall
D)below;rise

Question

Quizplus · Accepted Answer

When output is above the natural rate level, demand for labor increases, leading to higher wages, which in turn decreases short-run aggregate supply as production costs increase.

Everything Else Held Constant,when Output Is ________ the Natural Rate