If the price level rises but the money wage rate does not,then firms will hire ________ labor and the quantity of real GDP supplied will ________.
A)more;increase
B)the same amount of;not change
C)less;decrease
D)more;not change
E)less;increase

Question

Quizplus · Accepted Answer

When the price level rises and the money wage rate remains constant, the real wage rate falls, making labor cheaper for firms. As a result, firms will hire more labor, leading to an increase in the quantity of real GDP supplied.

If the Price Level Rises but the Money Wage Rate