The quantity of real GDP supplied increases when the price level increases because
A)the quantity of money increases.
B)investment increases.
C)aggregate demand increases.
D)the real wage rate falls.
E)the real wage rate rises.

Question

Quizplus · Accepted Answer

When the price level increases, the real wage rate falls, making labor cheaper for firms, which can lead to an increase in the quantity of real GDP supplied.

The Quantity of Real GDP Supplied Increases When the Price