Suppose expected wages decrease at each price level. As a result, _____________, and __________. Group of...
Suppose expected wages decrease at each price level. As a result, _____________, and __________.
Group of answer choices
AD decreases; AD shift rightward
SRAS increases; AD stay the same
SRAS decreases; AD stay the same
AD decreases; AD shift leftward
Homework Answers
Ans. AD decreases; AD shift leftward
Since a decrease in expected wages will decrease the current consumption and increase the current saving, the aggregate demand will fall and this will cause a leftward shift in the aggregate demand.
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