The government passes a law which doubles the wages of all workers.Aggregate supply will ________,and real GDP will ________,and the price level will ________.
A)increase;remain the same;increase.
B)remain the same;increase;increase.
C)increase;increase;remain the same.
D)decrease;increase;increase.
E)decrease;decrease;increase.

Question

Quizplus · Accepted Answer

Doubling wages increases production costs, leading to a decrease in aggregate supply. This can reduce real GDP and increase the price level due to higher costs being passed on to consumers.

The Government Passes a Law Which Doubles the Wages of All