Answer to Question #200057 in Macroeconomics for Sima

Question

Which one of the following statements is correct?

(a) When expected prices A larger Then actual prices, Wages eventually increase

(b) An increase in government expenditure will result in the AD curve shifting to the left.

(c) The AD curve has a positive slope

(d) if expected prices are larger than actual prices, the wages will decrease as price expectations are adjusted.

Answer 1

(a) When expected prices are larger than actual prices, Wages eventually increase.