Question 14
14. Suppose the aggregate price level has decreased, but workers did not notice this initially.
Suppose the supply curve of labor initially looked as follows.
W
S<sub>L</sub>(P<sup>e</sup>=P<sub>0</sub>)
L
1.9 pts
According to our self-correcting model, once workers notice that the aggregate price level
has decreased.
nothing will happen to the Supply of Labor (SL) curve.
none of the other options.
the equilibrium wage level, W, will increase.
the SL curve will increase (shift right).
the SL curve will decrease (shift left).