Consider aggregate supply and then choose the statement that is correct O A. Alo

Question

Consider aggregate supply and then choose the statement that is correct O A. Along the AS curve, a rise in the price level brings a decrease in the quantity of real GDP supplied O B. Along the AS curve, a change in the price level brings an equal percentage change in the money wage rate C. The AS curve shows the relationship between the quantity of real GDP supplied and potential GDP when all other influences on production plans remain the same. D. The quantity of real GDP supplied equals potential GDP at the price level at which the real wage rate is at its full employment equilibrium level

Explanation / Answer

Correct option is (D).

When real wage rate is at full-employment level, the economy is said to be at its full-employment level where short run AS curve intersects long run AS curve, so quantity of real GDP supplied equals potential (full employment) GDP.

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