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:

Sympathetic

Pertaining to the sympathetic nervous system, part of the autonomic nervous system that often accelerates heart rate, constricts blood vessels, and raises blood pressure, preparing the body for action.

Parasympathetic

refers to the part of the autonomic nervous system responsible for rest and digestion, countering the fight-or-flight responses of the sympathetic system.

Nervous System

The network of nerve cells and fibers that transmits nerve impulses between parts of the body, regulating and coordinating bodily functions.

Holmes and Rahe

Psychologists who developed the Social Readjustment Rating Scale (SRRS), a scale that measures stress levels in life changes to predict illness risk.