If our leading trade partner’s economy is growing and at the same time real wage

Question

If our leading trade partner’s economy is growing and at the same time real wages in the US rise, what will happen in our economy?

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1) Equilibrium RGDP could rise, fall, or remain the same, and equilibrium price level in the economy will fall. 2) Equilibrium RGDP could rise, fall, or remain the same, and equilibrium price level in the economy will rise. 3) Equilibrium RGDP will fall, and equilibrium price level in the economy could rise, fall, or remain the same. 4) Equilibrium RGDP will rise, and equilibrium price level in the economy could rise, fall, or remain the same.

Explanation / Answer

Equilibrium RGDP could rise, fall, or remain the same, and equilibrium price level in the economy will rise.

Increase in real wages will ultimately increase in cost and price. also wage increase will create demand more and increae price.

2)

Equilibrium RGDP could rise, fall, or remain the same, and equilibrium price level in the economy will rise.

Increase in real wages will ultimately increase in cost and price. also wage increase will create demand more and increae price.

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