Final answer:
When real output is at a very high level, wages are likely to dramatically rise because the demand for labor increases, leading to higher equilibrium wages and lower unemployment.
Step-by-step explanation:
If the real output is at a very high level, which of the following will occur with wages? The correct answer is that wages will dramatically rise. Economic theory suggests that when real output is high, this indicates a strong economy with high demand for products and services. In such instances, as depicted in Figure 6(a), the demand for labor tends to shift to the right, which increases both the equilibrium wage and the equilibrium quantity of labor hired. As a result, in the short run, wages are likely to rise rather than fall, and the occurrence of unemployment tends to be lower due to high labor demand. It's important to note that while wages are sticky downward and do not easily decrease even during tough economic times, they can rise when the demand for labor increases. This situation does not typically lead to layoffs, and wages being supported by the government is an independent policy decision and not a direct result of high real output.