The quantity of real GDP supplied decreases if the price level ________ because it ________ profits.
A)rises; increases
B)rises; decreases
C)falls; increases
D)falls; decreases
E)None of the above answers are correct because the AS curve is vertical so that the quantity of real GDP supplied does not change when the price level changes.

Question

Quizplus · Accepted Answer

When the price level falls, it decreases profits, leading to a decrease in the quantity of real GDP supplied.

The Quantity of Real GDP Supplied Decreases If the Price