21.   With different price levels it is possible to derive the level of output that will obtain and hence an aggregate supply curve is derived.

22.   If the price level rises to when the nominal wage remains constant, the real wage falls.

23.   Downwardly sticky wages gives a J shape to the curve, labelled, with the curve beginning at the existing price level.

24.   The implied price level rise from to is sufficient to depress the real wage to the equilibrium value in part.

25.   Real national income is measured on the horizontal axis and the price level and the marginal cost of production are measured on the vertical axis.

26.   The nexus linking changes in the price level to changes in real income via the rate of interest is known as the Keynes effect.

27.   The fall in the price level from raises the real money stock from and reduces the rate of interest from.

28.   For a start the required reduction in the price level may have to be very large indeed before it has a significant impact on aggregate spending.

29.   A doubling of both the money-wage rate and the price level should not alter the supply of labour.

30.   This divergence between collective and individual rationality is not encountered when the means by which the real wage is reduced is via an increase in the absolute price level.