A rise in the price level in a country will tend to lead to a fall in the real value of exports and a rise in the real value of imports

A rise in the price level in a country will lead to lower real spending because it will lead to lower real wealth

A rise in the price level in a country will reduce the real value of firms’ profits, causing them to reduce planned investment

A rise in the price level in a country will lead to lower real spending because it will lead to a higher interest rate

A reduction in government transfers

An increase in VAT

A reduction in exports

An increase in the price level

Prices and nominal wages both increase by 10%

Prices rise by 10% while nominal wages increase by 5%

Prices rise by 5% while nominal wages increase by 10%

The real wage falls.

At the equilibrium wage, some people will prefer to care for their homes and families than have paid employment

At the equilibrium wage, some people who recently returned to the labour force after caring for young children will be unemployed while they wait for what they feel is the right job.

At the equilibrium wage, some people may be unemployed because the demand for their skills has fallen and there are no suitable jobs available

At the equilibrium wage, some new graduates will be unemployed while they wait for what they feel is the right job

Nominal wages may be sticky downwards

Prices may be sticky upwards

Individual producers may mistakenly believe that they alone have faced a fall in demand, and so may demand less labour

Individual workers may mistakenly believe that while nominal wages have fallen, the price level has not