Suppose the Full Employment Level of Real Output (Q) for a Hypothetical

Multiple Choice

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. Refer to the
Accompanying short-run aggregate supply schedules. If the price level unexpectedly increases from
100 to 125, the level of real output in the short run will

A) rise from $500 to $560.
B) fall from $500 to $440.
C) fall from $560 to $500.
D) rise from $440 to $500.