Exhibit 14-6 Aggregate supply curve

-In Exhibit 14-6,when the economy moves from a GDP of $1,000 billion to a GDP of $1,100 billion,
A) higher wages will lower the cost of producing goods.
B) real GDP and employment both increase, but only under conditions of constant prices.
C) real GDP increases and employment decreases, but only under conditions of price level increases.
D) real GDP and employment both increase, but only under conditions of price level increases.
E) the economy has reached full employment.

Question

Exhibit 14-6 Aggregate supply curve
 
-In Exhibit 14-6,when the economy moves from a GDP of $1,000 billion to a GDP of $1,100 billion,
A) higher wages will lower the cost of producing goods. 
B) real GDP and employment both increase, but only under conditions of constant prices. 
C) real GDP increases and employment decreases, but only under conditions of price level increases. 
D) real GDP and employment both increase, but only under conditions of price level increases. 
E) the economy has reached full employment.

Quizplus · Accepted Answer

When GDP increases from $1,000 billion to $1,100 billion, it typically indicates economic growth, which often leads to higher employment levels. However, this growth can also lead to increased demand, potentially causing price levels to rise.

Exhibit 14-6 Aggregate Supply Curve