The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve.

Draw a new curve that shows the effect of a rise in the money wage rate. Label it.

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Part 1

With a rise in the money wage rate, ______.

A.

firms have an incentive to use more capital-intensive methods in production, which will increase potential GDP in the long run

B.

firms have an incentive to produce more because they can charge a higher price

C.

the quantity that firms are willing to supply at each price level decreases

D.

potential GDP decreases in the long run because the size of the labour force decreases