As Firms Raise Output in Response to Rising Aggregate Demand

Multiple Choice

As firms raise output in response to rising aggregate demand,

A) resources become scarce, wages eventually rise, and a point is reached beyond which output cannot expand
B) they become increasingly efficient and are thus able to pass the cost savings on to consumers in the form of lower prices
C) real wages fall, interest rates rise, and consumers buy less
D) they hire fewer workers and substitute capital for labor
E) the level of nominal GDP falls, though real GDP rises