Answer to Question #227148 in Macroeconomics for Priest

Question

3. A decrease in the supply of labour results in:

A. an increase in the real wage rate and a decrease in potential GDP.

B. a decrease in the real wage rate and an increase in potential GDP.

C. an increase in the real wage rate and no change in potential GDP.

D. a decrease in the real wage rate and no change in potential GDP.

Answer 1

A. an increase in the real wage rate and a decrease in potential GDP.