In the accompanying graph, illustrate the impact of an
increase in the contracted nominal wage.
How do nominal wage changes affect the economy's output
at the long-run equilibrium?
A. An increase in the nominal wages decreases output in
the long run.
B. Cannot be determined because the answer depends on
the position of the aggregate demand curve.
C. Nominal wages have no impact on output in the long
run.
D. An increase in the nominal wages increases output in
the long run.