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

question 5

Multiple Choice

Suppose the full-employment level of real output (Q) for a hypothetical economy is $500 and that the price level (P) initially is 100.Use the following short-run aggregate supply schedules to answer the next question. Refer to the information above.In the long run, an increase in the price level from 100 to 125 will:

• A)increase real output from $500 to $560.
• B)decrease real output from $500 to $440.
• C)change the aggregate supply schedule from (a) to (c) and result in an equilibrium level of real output of $560.
• D)change the aggregate supply schedule from (a) to (b) and result in an equilibrium level of real output of $500.

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