contestada

If the price level rises but the money wage rate does not, then firms will hire ________ labor and the quantity of real GDP supplied will ________.
A) more; increase
B) the same amount of; not change
C) less; decrease
D) more; not change
E) less; increase

Respuesta :

Samawati

Answer:

A) more; increase

Explanation:

The law of supply states that higher prices lead to an increase in quantity supplied. An increase in prices encourages firms to produce more, sell more to make higher profits. If the wage rate does not increase, firms will hire more workers to increase production.  Firms will profit from a constant wage rate,  with an increase in prices and high production.

GDP is a quantitative measure of the total value of output in a country over time if the prices are high, firms will be encouraged to do more productions. An increase in output increases the value of GDP.