If,other things constant,the actual real wage is below the equilibrium real wage,the short-run aggregate supply curve in the next period would
A)be unaffected and the price level would remain constant.
B)shift upward and the price level would increase.
C)shift downward and the price level would fall.
D)be vertical and the price level would increase.

Question

Quizplus · Accepted Answer

If the actual real wage is below the equilibrium real wage, it implies that wages are lower than what firms are willing to pay. As a result, firms will increase production in the short run, leading to an increase in short-run aggregate supply. The increase in output will push down prices, leading to a higher price level. Therefore, the short-run aggregate supply curve will shift upward and the price level will increase.

If,other Things Constant,the Actual Real Wage Is Below the Equilibrium