Multiple choice question.
Move in the direction opposite the price level, because nominal wages stay fixed
Rise or fall along with the general price level, because nominal wages stay fixed
Shift in the direction of the short-run aggregate supply curve
Stay the same, because nominal wages also rise or fall with the price level
1 answer
The correct answer is:
Stay the same, because nominal wages also rise or fall with the price level.
In the long run, the economy is typically considered to be at full employment, and changes in the price level do not affect real output since nominal wages and prices adjust proportionately. This means that the real output remains unchanged.
