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

question 106

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, 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.