Assume That the Economy Is Initially Operating at the Natural

Multiple Choice

Assume that the economy is initially operating at the natural level of output. An increase in government spending will cause:

A) an increase in the real wage in the medium run.
B) no change in the real wage in the medium run.
C) a decrease in the real wage in the medium run.
D) an increase in the nominal wage in the medium run.
E) a decrease in the nominal wage in the medium run.