A fall in the price level brings a ________ in the real wage rate that ________ profits which leads to ________.
A)rise;reduces;firms temporarily shutting down
B)rise;reduces;firms restarting production
C)fall;increases;firms temporarily shutting down
D)rise;increases;firms restarting production
E)rise;increases;firms temporarily shutting down

Question

Quizplus · Accepted Answer

A fall in the price level means that the prices of goods and services are decreasing. This leads to an increase in the real wage rate, as workers can now buy more goods and services with their wages. However, this also reduces profits for firms, as they are now receiving less money for their products. This can lead to firms temporarily shutting down, as they are no longer able to make a profit.

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