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A business increases wages for its workers. Based on the simple circular flow mo...

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A business increases wages for its workers. Based on the simple circular flow model, what is the most likely short-term effect on the economy?

Firms will receive more revenue as households increase spending.

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Households will stop supplying labour to firms.

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The government will need to intervene to control inflation.

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Households will decrease their spending on goods and services.

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