When the nominal wage rate rises by x percent we
A)move upward along the SAS curve by x percent.
B)move downward along the SAS curve by x percent.
C)shift SAS upward by x percent.
D)shift SAS downward by x percent.

Question

Quizplus · Accepted Answer

When the nominal wage rate rises, the cost of production for firms increases. This leads to a decrease in the quantity of goods and services supplied at every price level, which is represented by an upward shift in the Short-Run Aggregate Supply (SAS) curve, not a movement along the curve.

When the Nominal Wage Rate Rises by X Percent We