When Self-Correction Works to Eliminate an Expansionary Gap, How Are

question 62

Multiple Choice

When self-correction works to eliminate an expansionary gap, how are money wages and real wages affected?  

• A) Money wages increase, and real wages increase. 
• B) Money wages increase, and real wages decrease. 
• C) Money wages decrease, and real wages decrease. 
• D) Money wages decrease, and real wages increase.

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Definitions:

The Wealth of Nations

A seminal book by Adam Smith that lays the foundations of classical economics and discusses the division of labor, productivity, and free markets.

Adam Smith

An 18th-century Scottish economist and philosopher, often considered the father of modern economics, best known for his work "The Wealth of Nations."

Specialization

The process by which individuals, businesses, or economies focus on producing a limited range of goods or services to gain efficiencies.

Total Output

The total amount of goods or services produced by an economy or firm within a specific period.