Which of the following could create an increase in the price level and a decrease in real GDP in the short run?
A)an increase in the money supply
B)an increase in government expenditures
C)a fall in stock prices
D)bad weather in farm provinces

Question

Quizplus · Accepted Answer

Bad weather in farm provinces can reduce the supply of agricultural goods, causing an increase in their prices. This, in turn, can create inflationary pressures and decrease real GDP as consumers have to spend more on food, leaving less money to spend on other goods and services. Options A and B, on the other hand, could increase real GDP in the short run, while option C may have mixed effects on the economy.

Which of the Following Could Create an Increase in the Price