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Questions › DSE › DSE 2004 › Q22
2 marks, −1Macroeconomics › AD-AS model › Keynesian and short-run aggregate supplyHardabout 3 min

DSE 2004 Question 22: AD-AS model

For the labour market with a minimum nominal wage W0W_0W0​ (D(w)=1−wD(w)=1-wD(w)=1−w, S(w)=wS(w)=wS(w)=w, W=max⁡{W0,P/2}W=\max\{W_0,P/2\}W=max{W0​,P/2}): given the price level PPP, the employment level is

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For the labour market with a minimum nominal wage W₀ (D(w)=1-w, S(w)=w, W=max {W₀,P/2}): given the price level P, the employment level is (A) min {1/2, 1-W₀/P} (B) max {1/2, 1-W₀/P} (C) 1-W₀/2P (D) 1-1/2P

Also written as: For the labour market with a minimum nominal wage W_0 (D(w)=1-w, S(w)=w, W=max {W_0,P/2}): given the price level P, the employment level is

AD-AS model has come up 59 times in 7 exams since 2004.

What this question tests

This question is on Keynesian and short-run aggregate supply, part of AD-AS model in Macroeconomics.

Why output responds to demand in the short run: sticky wages and prices, wage floors and upward-sloping supply.

TestStop has 24 past-paper questions on this subtopic; the nearest in year are below.

  • GATE 2023 · Q54Which of the following models explain(s) the upward-sloping aggregate supply curve in the short-run?
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Question from the DSE 2004 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.