Am a bit confused as to why when the price level rises, and the money wage rate and other resource prices remain constant, the Quantinty of Real GDP supplied should increase. I must be missing something, I understand why a change in money wage rate affects Quanity of real GDP supplied. Please help
The money wage rate and other resources price is constant => production costs are constant… Now if the price of output is increasing, companies will produce more to increase profits (or reduce losses) … So the Agg supply will increase…