A fall in the money wage rate shifts
A) both the SAS and LAS curves rightward.
B) both the SAS and LAS curves leftward.
C) the SAS curve rightward but leaves the LAS curve unchanged.
D) the LAS curve rightward but leaves the SAS curve unchanged.

Question

Quizplus · Accepted Answer

A fall in the money wage rate decreases the cost of production, which increases short-run aggregate supply (SAS) by shifting it rightward. The long-run aggregate supply (LAS) curve, however, is not affected by changes in the wage rate as it is determined by factors like technology, resources, and institutions, not by the price level.

A Fall in the Money Wage Rate Shifts