In the figure above, the economy is at point A when the price level falls to 100. Money wage rates and all other resource prices remain constant. Firms are willing to supply output equal to
A) $15.5 trillion.
B) $16.0 trillion.
C) $16.5 trillion.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The correct answer is A because at a price level of 100, firms are willing to supply output equal to $15.5 trillion. This is because the aggregate supply curve is upward sloping, meaning that as the price level increases, firms are willing to supply more output.

In the Figure Above, the Economy Is at Point a When