3 good questions and answers: "Aggregate Supply - from Short Run to Long Run"
- it is only possible to produce an aggregate output level this is higher than the potential output because nominal wages have not fully adjusted upward.
- until this upward adjustment in nominal wages occurs, producers are earning high profits and producing a high level of output
- It means a high level of unemployment
- because jobs are scarce and workers and abundant the nominal wage will fall over time
- shifting the short run aggregate supply curve rightward
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