Based on the concept of price controls, what happens when wages are set above the equilibrium level by the government?
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What happens if the price level is above the equilibrium level?
What happens when the minimum wage is set above a market's equilibrium wage?
Suppose an economy is in long-run equilibrium. The central bank raises the money supply by 5 percent. what causes the economy to move from its short-run equilibrium to its long-run equilibrium?
1. The government increases taxes to curb aggregate demand.2. Nominal wages, prices, and perceptions adjust upward to this new price level.3. The government increases spending to increase aggregate demand.4. Nominal wages, prices, and perceptions adjust downward to this new price level.