When the Price Level Rises and the Money Wage Rate

question 273

Multiple Choice

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

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

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Definitions:

Cash-Equivalent Value

The value of an asset that is easily convertible into a known amount of cash with minimal risk of change in value.

Business Activities

Operations, actions, and tasks that a company engages in as part of its economic operations, including production, sales, marketing, and finance.

Resources

Assets, materials, and inputs used by an organization to produce goods or services.

Net Assets

The total value of all assets minus the total value of all liabilities, representing the ownership interest of shareholders in a company.