The quantity of real GDP supplied increases when the price level increases because
A)investment increases.
B)the quantity of money increases.
C)the real wage rate falls.
D)the real wage rate rises.
E)aggregate demand increases.

Question

Quizplus · Accepted Answer

When the price level increases, the real wage rate falls, making labor cheaper for firms, which can lead to an increase in the quantity of real GDP supplied as firms are willing to hire more labor and produce more output.

The Quantity of Real GDP Supplied Increases When the Price