LRAS P3 Price level P2 P1 SRAS CPI AD Yp Y Real GDP (billions of dollars per year) In the above Exhibit, the self-regulatory mechanism is that in the long run: O competition from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. O competition among consumers causes an increase in the CPI and a rightward shift in SRAS. O competition among firms so that they attract workers increases nominal wages and this causes an increase in SRAS. O firms increase their nominal wages and this causes a decrease in the SRAS.

LRAS P3 Price level P2 P1 SRAS CPI AD Yp Y Real GDP (billions of dollars per year) In the above Exhibit, the self-regulatory mechanism is that in the long run: O competition from unemployed workers causes an increase in nominal wages and a leftward shift in SRAS. O competition among consumers causes an increase in the CPI and a rightward shift in SRAS. O competition among firms so that they attract workers increases nominal wages and this causes an increase in SRAS. O firms increase their nominal wages and this causes a decrease in the SRAS.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.
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