11. If the price level falls and the money wage rate does not change, some firms...
11. If the price level falls and the money wage rate does not change, some firms ________ and there is ________.
A.
start-up; a rightward shift of the aggregate supply curve
B.
shut down; a decrease in the quantity of real GDP supplied
C.
start-up; an increase in potential GDP
D.
shut down; a leftward shift of the aggregate supply curve
E.
shut down; a decrease in potential GDP
Homework Answers
Option B. shut down; a decrease in the quantity of real GDP supplied
Explanation: This would increase the real costs of the firms as the real wage would increase. Therefore, many firms would shut down and real supply would decrease.
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