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A Positive Relationship Between Inflation and Aggregate Supply Can Exist

Question 56

Multiple Choice

A positive relationship between inflation and aggregate supply can exist. This is because _____.


A) firms will be willing to decrease supply when real wages fall
B) firms will be willing to increase supply when nominal wages rise
C) firms will be willing to increase supply when real wages fall
D) firms will be willing to decrease supply when nominal wages fall

Correct Answer:

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