-In the above figure, the economy is at point A. Then the price level falls to 90 while the money wage rate does not change. Firms will be willing to supply output equal to
A)$13.0 billion.
B)more than $13.0 billion.
C)less than $13.0 billion.
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. Then the price level falls to 90 while the money wage rate does not change. Firms will be willing to supply output equal to
A)$13.0 billion. 
B)more than $13.0 billion. 
C)less than $13.0 billion. 
D)Without more information, it is impossible to determine which of the above answers is correct.

Quizplus · Accepted Answer

When the price level falls and the money wage rate remains unchanged, the real wage rate increases. This makes labor more expensive for firms, leading them to reduce the quantity of output they are willing to supply, resulting in less than $13.0 billion.

-In the Above Figure, the Economy Is at Point A Then