In the Short Run, If There Is an Increase in the Money

question 389

Multiple Choice

In the short run, if there is an increase in the money wage rate, then

• A) short-run aggregate supply increases and the price level rises.
• B) short-run aggregate supply decreases and the price level rises.
• C) aggregate demand decreases and the price level falls.
• D) aggregate demand increases and the price level rises.

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Definitions:

Production Function

A model in economics that describes the relationship between the quantities of productive factors used (inputs) and the amount of product obtained (outputs).

Inputs

Resources used in the production of goods and services, such as labor, materials, and capital.

Output

The total amount of goods or services produced by a company, system, or economic process.

Marginal Product

The additional output that is produced by using one more unit of a particular input, ceteris paribus.