Suppose the full employment level of real output (Q)for a hypothetical economy is $500,the price level (P)initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question. Refer to the information given.In the long run,a fall in the price level from 100 to 75 will:
A) decrease real output from $500 to $440.
B) increase real output from $500 to $620.
C) change the aggregate supply schedule from (a)to (c)and produce an equilibrium level of real output of $500.
D) change the aggregate supply schedule from (a)to (b)and produce an equilibrium level of real output of $500.

Question

Suppose the full employment level of real output (Q)for a hypothetical economy is $500,the price level (P)initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question.  Refer to the information given.In the long run,a fall in the price level from 100 to 75 will:
A) decrease real output from $500 to $440. 
B) increase real output from $500 to $620. 
C) change the aggregate supply schedule from (a)to (c)and produce an equilibrium level of real output of $500. 
D) change the aggregate supply schedule from (a)to (b)and produce an equilibrium level of real output of $500.

Quizplus · Accepted Answer

The Answer of Suppose the full employment level of real output (Q)for a hypothetical economy is $500,the price level (P)initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question.  Refer to the information given.In the long run,a fall in the price level from 100 to 75 will:
A) decrease real output from $500 to $440. 
B) increase real output from $500 to $620. 
C) change the aggregate supply schedule from (a)to (c)and produce an equilibrium level of real output of $500. 
D) change the aggregate supply schedule from (a)to (b)and produce an equilibrium level of real output of $500.

Suppose the Full Employment Level of Real Output (Q)for a Hypothetical