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Suppose the Price Level Rises Leading to a Decrease in the Real

Question 39

Multiple Choice

Suppose the price level rises leading to a decrease in the real wage and increasing employment and real GDP.Which of the following are ways in which this occurs?
i.Firms employ more labour and increase output.
ii.Firms shut down.
iii.Firms start up a new business.


A) i only
B) ii only
C) iii only
D) i and iii
E) i,ii and iii

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