-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $18.0 trillion.
B) $18.0 trillion.
C) more than $18.0 trillion.
D) Without more information, it is impossible to determine which of the above answers is correct.

Question

-In the above figure, the economy is at point A and the money wage rate falls by 10 percent. If the price level is constant, firms will be willing to supply output equal to
A) less than $18.0 trillion. 
B) $18.0 trillion. 
C) more than $18.0 trillion. 
D) Without more information, it is impossible to determine which of the above answers is correct.

Quizplus · Accepted Answer

When the money wage rate falls and the price level remains constant, firms' production costs decrease. This typically makes it more profitable for firms to increase output, leading to a willingness to supply more than the initial output level.

-In the Above Figure, the Economy Is at Point a and the Money