-If the Money Wage Rate and the Price Level Both

question 86

Multiple Choice

-If the money wage rate and the price level both rise by the same proportion, then, in the figure above, the potential GDP line ________, and the aggregate supply curve ________.

• A) shifts rightward; does not shift
• B) shifts rightward; shifts leftward
• C) shifts rightward; shifts rightward
• D) does not shift; shifts rightward
• E) does not shift; shifts leftward

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Definitions:

Inputs

Resources such as labor, materials, and capital that are used in the production process to produce goods and services.

Output

The total amount of goods or services produced by a company or country.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically characterized by a reduction in average costs with increased production.

Minimum Efficient Scale

The smallest scale of production a firm can achieve while still taking full advantage of economies of scale in terms of costs per unit.