Which of the following would cause prices and real GDP to rise in the short run?
A)an increase in the expected price level
B)an increase in the money supply
C)a decrease in the capital stock
D)an increase in taxes.

Question

Quizplus · Accepted Answer

An increase in the money supply would cause prices and real GDP to rise in the short run because there is more money available for spending, which leads to an increase in demand and higher prices. Additionally, firms would increase production to meet the increased demand, leading to an increase in real GDP. The other options would have the opposite effects on prices and real GDP.

Which of the Following Would Cause Prices and Real GDP