Refer to the information given. In the long run, a fall in the price level from 100 to 75 will:
Suppose the full employment level of real output (Q) for a hypothetical economy is $500, the
price level (P) initially is 100, and prices and wages are flexible both upward and downward.
Use the following short-run aggregate supply schedules to answer the question.
A. decrease real output from $500 to $440.
B. increase real output from $500 to $620.
C. change the aggregate supply schedule from (a) to (c) and produce an equilibrium level of
real output of $500.
D. change the aggregate supply schedule from (a) to (b) and produce an equilibrium level of
real output of $500.
C. change the aggregate supply schedule from (a) to (c) and produce an equilibrium level of
real output of $500.
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