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.Use the following short-run aggregate supply schedules to answer the question. Refer to the information given.In the long run,an increase in the price level from 100 to 125 will:

A) increase real output from $500 to $560.
B) decrease real output from $500 to $440.
C) change the aggregate supply schedule from (a) to (c) and result in an equilibrium level of real output of $560.
D) change the aggregate supply schedule from (a) to (b) and result in an equilibrium level of real output of $500.