If the money wage and other resource prices do not change when the price level rises by 10 percent,
)
A) there is movement along the short- run aggregate supply curve
B) the long- run aggregate supply curve shifts leftward
C) massive labor lay- offs occur
D) the short- run aggregate supply curve shifts leftward

Question

Quizplus · Accepted Answer

When the price level rises by 10 percent and money wages and other resource prices remain unchanged, firms experience higher profitability, leading to an increase in the quantity of goods and services supplied. This results in a movement along the short-run aggregate supply curve, not a shift.

If the Money Wage and Other Resource Prices Do Not