-Refer to the Above Diagram

question 118

Multiple Choice

-Refer to the above diagram.Assume that nominal wages initially are set on the basis of the price level P₂ and that the economy initially is operating at its full-employment level of output Q_f.In terms of this diagram,the long-run aggregate supply curve:

• A) is AS₂.
• B) is a vertical line extending from Q_f upward through e,b,and d.
• C) may be either AS₁,AS₂,or AS₃ depending on whether the price level is P₁,P₂,or P₃.
• D) is a horizontal line extending from P₂ rightward through f,b,and g.

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Definitions:

Minimum Wage

The lowest legal salary that employers can pay to workers, established by government legislation.

Right-to-Work Laws

Legislation that prohibits union security agreements, ensuring that employment is not affected by membership or non-membership in a labor union.

Collective Bargaining

A process of negotiation between employers and a group of employees aimed at agreeing on working conditions, wages, and benefits.

Minimum Wage

The lowest legal salary that employers can pay their employees.