For the same labour market with wage floor (, , ), given the price level , the employment level is
Tap an option to check your answer.
2 marks, −0.666666666666667MacroeconomicsAD-AS modelKeynesian and short-run aggregate supplyModerateabout 3 min
DSE 2017 Question 44: AD-AS model
Answer and worked solution
Checking your account…
Plain-text version
For the same labour market with wage floor (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 same labour market with wage floor (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.
Similar questions from other papers
- In the short run, if planned purchase exceeds production
- In the case of classical economics, an increase in the nominal money stock causes
- Which of the following is/are CORRECT according to the classical macroeconomic school? (A) Long run aggregate supply curve is vertical. (B) If long run aggregate supply…
- In the sticky-price model of aggregate supply, if none of the firms in the market have flexible prices, then the short-run aggregate supply curve will be
- Effective Demand Problem may arise even in a competitive market economy under Rational Expectation, if there is:
Question from the DSE 2017 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.