A change in the money wage rate shifts
A) both the SAS and LAS curves.
B) the LAS curve but not the SAS curve.
C) the SAS curve but not the LAS curve.
D) neither the SAS nor the LAS curve.

Question

Quizplus · Accepted Answer

The SAS (Short-Run Aggregate Supply) curve shifts due to changes in the money wage rate because it affects production costs, which in turn influence the prices of goods and services in the short run. The LAS (Long-Run Aggregate Supply) curve, however, is vertical and represents the economy's potential output, unaffected by price levels or wage rates in the long run.

A Change in the Money Wage Rate Shifts