The economy is currently in the situation depicted by the graph below. If minimum wage laws increase the minimum wage, what would be the likely initial impact on the economy? Potential Output AS1 AD1 PRICE LEVEL P1 a Q1 OUTPUT The price level will fall and real GDP will rise The price level will fall and real GDP will fall The price level will rise and real GDP will rise No change to the price level but real GDP will rise The price level will rise and real GDP will fall
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'The graph shows the aggregate demand (AD) curve and the long-run aggregate supply (LRAS) curve for a hypothetical economy. Suppose that the economy observes an increase in the human capital of workers, causing productivity to rise_ Show the effect of this change by shifting one of the curves in the graph LRAS How will this change affect the rate of inflation? Inflation will fall. Inflation will rise_ Inflation will be unchanged. How will this change affect the growth rate? Real GDP growth rate The growth rate will decrease. The growth rate will increase The growth rate will be unchanged'
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