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

question 139

Multiple Choice

Suppose the full-employment level of real output (Q) for a hypothetical economy is $500 and that the price level (P) initially is 100.Use the following short-run aggregate supply schedules to answer the next question.

-Refer to the information above.In the long run,an increase in the price level from 100 to 125 will:

• A) increase real output from $500 to $560.
• B) decrease real output from $500 to $440.
• C) change the aggregate supply schedule from (a)to (c)and result in an equilibrium level of real output of $560.
• D) change the aggregate supply schedule from (a)to (b)and result in an equilibrium level of real output of $500.

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Definitions:

Quantity Supplied

The measure of a good or service that firms are eager and prepared to distribute at an established price throughout a set period.

Quantity Demanded

The total amount of a good or service that consumers are willing to buy at a given price in a given time period, holding all other factors constant.

Number of Sellers

Refers to the total count of providers or vendors of a particular good or service in the market.

Price of Air Conditioners

The amount of money required to purchase air conditioning units, influenced by factors such as brand, technology, energy efficiency, and market demand.