An economy is at potential GDP. If the price level increases in the short-run, all else equal, then ... Select one: a. Firms will realize greater profits, since revenues increase, but nominal wages are still fixed. As a result, real GDP will rise above its full employment level, and the unemployment rate will be below the natural rate of unemployment. b. Firms will realize reduced profits since revenues fall, but nominal wages are still fixed. As a result, Real GDP falls below its full employment level, and the unemployment rate will be below the natural rate of unemployment. c. Firms will realize greater profits, since revenues increase, but nominal wage costs are falling. As a result, Real GDP rises beyond its full employment level, and the unemployment rate will be above the natural rate of unemployment. d. None of the above
+5
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An economy is at potential GDP. If the price level increases in the short-run, all else equal, then ... Select one: a. Firms will realize ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Home » Business » An economy is at potential GDP. If the price level increases in the short-run, all else equal, then ... Select one: a. Firms will realize greater profits, since revenues increase, but nominal wages are still fixed.