-In the above figure, which movement illustrates the impact of the price level and money wage rate falling at the same rate?
A) E to H
B) E to K
C) E to J
D) E to G

Question

-In the above figure, which movement illustrates the impact of the price level and money wage rate falling at the same rate?
A) E to H 
B) E to K 
C) E to J 
D) E to G

Quizplus · Accepted Answer

When both the price level and money wage rate fall at the same rate, the aggregate supply curve shifts to the right, indicating an increase in output without a change in the price level. This is represented by a movement from point E to point J, where the economy moves to a higher level of output at the same price level, illustrating the increase in real balances and the decrease in real wage, which encourages more production.

-In the Above Figure, Which Movement Illustrates the Impact of the Price