Microeconomic substitution is impossible for the economy as a whole because
A)money is a veil.
B)real GDP measures the total quantity of goods and services produced by all firms in all markets.
C)the prices of some goods and services adjust sluggishly in response to changing economic conditions.
D)a lower price level increases real wealth,which stimulates spending by consumers and vice-versa.

Question

Quizplus · Accepted Answer

Microeconomic substitution refers to the ability of consumers to replace one good with another in response to changes in relative prices. For the economy as a whole, real GDP measures the total output, and substitution between goods does not change the total quantity produced, only the composition.

Microeconomic Substitution Is Impossible for the Economy as a Whole