Which of the following will reduce the price level and real output in the short run?
A)an increase in government purchases.
B)an decrease in oil prices
C)a decrease in the money supply
D)technical progress

Question

Quizplus · Accepted Answer

A decrease in the money supply will lead to a decrease in aggregate demand, reducing both the price level and real output in the short run. A decrease in government purchases or a decrease in oil prices could increase aggregate demand and potentially increase both the price level and real output. Technical progress could potentially increase real output in the long run, but its effect on the price level would depend on its impact on aggregate demand and aggregate supply.

Which of the Following Will Reduce the Price Level and Real