Suppose the Full Employment Level of Real Output (Q)for a Hypothetical

question 69

Multiple Choice

Suppose the full employment level of real output (Q) for a hypothetical economy is $500,the price level (P) initially is 100,and prices and wages are flexible both upward and downward.Use the following short-run aggregate supply schedules to answer the question. Refer to the information given.In the long run,a fall in the price level from 100 to 75 will:

• A) decrease real output from $500 to $440.
• B) increase real output from $500 to $620.
• C) change the aggregate supply schedule from (a)to (c)and produce an equilibrium level of real output of $500.
• D) change the aggregate supply schedule from (a)to (b)and produce an equilibrium level of real output of $500.

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A numerical measure that indicates the extent and direction of the relationship between two variables, ranging from -1 to 1.

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A statistical measurement that indicates the extent to which two variables fluctuate together.