Question

If the economy is self-regulating and in a recessionary gap, what happens? Question 5 options: Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level rise. Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls. Wages fall, the SRAS curve shifts rightward, and both the price level and Real GDP fall. Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises. none of the above

Answer 1

Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises.

Step-by-step explanation:

A self-regulating economy is one that functions with controls that are externally imposed. This means that employment increases and the economy produces Real GDP. For it to be in a recessionary gap, then wages will fall the economy is bound to move itself towards the production of Natural Real GDP, and this will be done at a lower price level. And due to the increase in real production and lower price levels, the short-run aggregate supply curve will shift to the right.