An increase in the money wage rate
A) increases the long-run aggregate supply.
B) decreases the long-run aggregate supply.
C) increases the short-run aggregate supply.
D) decreases the short-run aggregate supply.

Question

Quizplus · Accepted Answer

An increase in the money wage rate raises production costs, leading to a decrease in short-run aggregate supply as firms reduce output at existing price levels.

An Increase in the Money Wage Rate