All of the following will raise the price level except
A)aggregate demand increases and short-run aggregate supply decreases.
B)aggregate demand increases.
C)short-run aggregate supply decreases.
D)an increase in the quantity of capital.
E)an increase in the quantity of money.

Question

Quizplus · Accepted Answer

An increase in the quantity of capital leads to an increase in productivity which shifts the short-run aggregate supply curve to the right, resulting in a decrease in the price level. Therefore, an increase in the quantity of capital does not raise the price level.

All of the Following Will Raise the Price Level Except