Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50, and the price of each input is $9. If productivity increased such that 400 units are now produced with the quantity of inputs still equal to 50, then per-unit production costs would:
A. increase and aggregate demand would decrease.
B. decrease and aggregate demand would increase.
C. decrease and aggregate supply would increase.
D. decrease and aggregate supply would decrease.
Answer: C
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A. J + I. B. E + F + J + I. C. E + F. D. J.
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A) Expenditure-income analysis B) Budget constraint analysis C) Revenue-income analysis D) Cost-benefit analysis
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