Final answer:
The correct answer is D: When the price level rises but the money wage rate and other factor prices remain the same, there is a movement along the SAS curve, and the real GDP supplied increases.
Step-by-step explanation:
When the price level rises but the money wage rate and other factor prices remain the same, there is a movement along the Short-Run Aggregate Supply (SAS) curve, and the quantity of real GDP supplied increases. This occurs because the price level on the vertical axis represents prices for final goods or outputs bought in the economy, i.e., the GDP deflator, not the price level for intermediate goods and services that are inputs to production. With higher prices for their goods and services but unchanged input costs, firms have an incentive to increase production to maximize profits. Therefore, the correct answer is D. The SAS curve; increases.