When the Price Level Rises and the Money Wage Rate

question 98

Multiple Choice

When the price level rises and the money wage rate does not change,

• A)existing businesses do not change their level of output.
• B)the quantity of potential GDP increases because the quantity of real GDP supplied increases.
• C)profits fall and more businesses fail.
• D)the quantity of real GDP supplied increases as more businesses start up and potential GDP does not change.
• E)the quantity of real GDP supplied decreases as more businesses fail and potential GDP does not change.

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Definitions:

Operating Expenses

Recurring expenses related to the central operations of a business, such as rent, utilities, and payroll, excluding costs of goods sold.

Earnings Per Share

A measure of a company's profitability, calculated as the net income divided by the number of outstanding shares of common stock.

Common Stockholders

Individuals or entities that own shares of common stock in a corporation, giving them rights to dividends and voting in shareholder meetings.

Net Income

Net earnings of a company, calculated by subtracting all costs, including taxes and expenses, from its overall revenue.