Suppose That Product Prices Start Rising but Nominal Wages Do

question 6

Multiple Choice

Suppose that product prices start rising but nominal wages do not. In that case,

• A) real wages will fall and firms will want to produce more because doing so will be profitable.
• B) real wages will rise and firms will want to produce more because doing so will be profitable.
• C) there will be a surplus of goods and services produced.
• D) there will be a shortage of goods and services produced.

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