If oil prices increase, then in the short run, real GDP will _{--------------------}and the price level will_{--------------------} . A)increase; fall B)not change; rise C)decrease; rise D)decrease; fall E)increase; rise

Question

Quizplus · Accepted Answer

An increase in oil prices raises production costs, leading to a decrease in aggregate supply. This results in a lower real GDP and a higher price level in the short run.

If Oil Prices Increase, Then in the Short Run, Real