If an economy is in short-run equilibrium and the level of actual real GDP is greater than potential output,in the long run nominal wages will _____ and the _____ curve will shift _____,bringing the economy back to its potential real GDP.
A) rise;SRAS;left
B) rise;AD;right
C) fall;SRAS;right
D) fall;AD;left

Question

Quizplus · Accepted Answer

In the long run, if actual real GDP is greater than potential output, nominal wages will rise due to increased demand for labor. This increase in wages will cause the short-run aggregate supply (SRAS) curve to shift left, reducing output back to potential GDP.

If an Economy Is in Short-Run Equilibrium and the Level