-In the Above Figure, Suppose the Economy Is at Point

question 127

Multiple Choice

-In the above figure, suppose the economy is at point A initially. For real GDP to increase to and consistently remain above $16 trillion
I.the price level must increase to above 90.
II.there must be continued increases in the quantity of money.

• A) only I
• B) only II
• C) Both I and II are correct.
• D) Neither I nor II is correct.

---

Definitions:

Derived Demand

Demand for a factor of production or intermediate good that occurs as a result of the demand for another related final good or service.

MRP = MRC Rule

The principle that to maximize profit (or minimize losses), a firm should employ the quantity of a resource at which its marginal revenue product (MRP) is equal to its marginal resource cost (MRC), the latter being the wage rate in a purely competitive labor market.

Marginal Productivity

The additional output generated by employing one more unit of a specific factor of production while holding other factors constant.

Professional Soccer Players

Athletes who are paid to play soccer as their main occupation, often participating in national and international leagues.