Figure 8-5 Panel (A) Shows an Economy's Aggregate Production

Figure 8-5 Panel (a) shows an economy's aggregate production function, Panel (b) shows the labor market and Panel (c) shows the economy's long-run aggregate supply curve.
-Refer to Figure 8-5. In the labor market represented in Panel (b) ,
I. the equilibrium real wage equals $40,000.
II. at the equilibrium real wage, 100 million workers are employed.
III. the equilibrium real wage is that which prevails when the economy achieves its natural level of employment.

A) I only
B) I and II only
C) I, II, and III
D) None of the above; to determine if the labor market is in equilibrium, we need information on the economy's aggregate production function.

Correct Answer:

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