With fixed quantities of capital, land, and entrepreneurship and fixed technology, the amount of real GDP produced increases when ________ increases. i. the quantity of labor employed
Ii. the inflation rate
Iii. the price level

Question

Quizplus · Accepted Answer

Real GDP is a measure of the value of goods and services produced in an economy adjusted for inflation. The only variable that affects the value of goods and services produced in an economy, given the fixed quantities of capital, land, entrepreneurship and fixed technology, is the quantity of labor employed. Therefore, an increase in the quantity of labor employed will increase the amount of real GDP produced. The inflation rate and price level do not affect the quantity of goods and services produced in an economy, therefore choices ii and iii are incorrect.

With Fixed Quantities of Capital, Land, and Entrepreneurship and Fixed