A rise in the price level brings a ________ in the real wage rate that ________ profits which leads to ________ production.
A) fall; increases; increasing
B) rise; reduces; decreasing
C) rise; increases; decreasing
D) rise; reduces; increasing
E) fall; decreases; decreasing

Question

Quizplus · Accepted Answer

A rise in the price level decreases the real wage rate because the purchasing power of wages falls. This increase in profits incentivizes firms to increase production.

A Rise in the Price Level Brings a ________ in the Real