-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $16.0 trillion.
B) $16.0 trillion.
C) more than $16.0 trillion.
D) Without more information, it is impossible to determine which of the above answers is correct.

Question

-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $16.0 trillion. 
B) $16.0 trillion. 
C) more than $16.0 trillion. 
D) Without more information, it is impossible to determine which of the above answers is correct.

Quizplus · Accepted Answer

When the money wage rate falls by 10 percent and the price level remains constant, firms' costs of production decrease. This makes it more profitable for firms to produce and supply more output, leading to an output level of more than $16.0 trillion.

-In the Above Figure, the Economy Is at Point a and the Money