In the short run, what type of relationship exists between the average price level and the output level in an economy?
A) positive
B) negative
C) unchanging price regardless of output level
D) it depends on whether the price level change is caused by a supply shift or a demand shift

Question

Quizplus · Accepted Answer

In the short run, the relationship between the average price level and the output level in an economy depends on whether the change in the price level is caused by a shift in supply or demand. A demand shift typically leads to a positive relationship (higher demand increases both price and output), while a supply shift can lead to a negative relationship (a decrease in supply increases price but decreases output).

In the Short Run, What Type of Relationship Exists Between