The government passes a law which doubles the wages of all workers.Aggregate supply will ________,real GDP will ________,and the price level will ________.
A)increase;increase;remain the same
B)decrease;decrease;increase
C)decrease;increase;increase
D)remain the same;increase;increase
E)increase;remain the same;increase

Question

Quizplus · Accepted Answer

Doubling wages increases production costs, leading to a decrease in aggregate supply. This results in a decrease in real GDP and an increase in the price level due to cost-push inflation.

The Government Passes a Law Which Doubles the Wages of All