If the process of long run economic adjustment is like a self-regulating thermostat (A:B), how does a decrease in nominal wages (C:?) influence the economy's return to full employment?

When we think of the economy as a self-regulating thermostat, we can imagine it trying to maintain a comfortable temperature, which in this case represents full employment. If nominal wages decrease, it means that workers are paid less money for their jobs. This can lead to businesses being able to hire more people since their costs are lower, helping to reduce unemployment. As more people find jobs, spending in the economy increases, which encourages businesses to produce more and possibly raise wages again. For example, if a company cuts wages but then hires extra workers, those new employees will have money to spend, helping the economy adjust back to full employment.