According to the auction theory developed above, an increase in
nominal aggregate demand in the economy
1. will always cause aggregate output and employment
to increase.
2. will always cause the real wage rate to
increase.
3. will cause the aggregate supply curve of labour
to remain unchanged if workers and firms perceive the
observed shifts in the demands for their output to be
specific to their own industries.
4. will do all of the above.
Choose the correct option.