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

Question

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

Quizplus · Accepted Answer

When the price level and money wage rate rise at the same rate, the aggregate supply curve shifts vertically upwards. This is because the increase in the price level is offset by the increase in wages, leaving the real wage (and thus production costs) unchanged. Movement from E to G represents this scenario, as it shows a vertical shift, indicating that the quantity of goods and services supplied at each price level remains the same, but at a higher overall price level and wage rate.

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