In the long run,a decrease in the price level:
A) leaves output prices unchanged relative to input prices.
B) increases the profit margins of many producers.
C) decreases RGDP supplied.
D) none of the above

Question

Quizplus · Accepted Answer

A decrease in the price level means that the prices of goods and services are falling. This will lead to an increase in the real value of money, which means that people will be able to buy more goods and services with the same amount of money. This will lead to an increase in demand for goods and services, which will in turn lead to an increase in output prices relative to input prices.

In the Long Run,a Decrease in the Price Level