In the short run, an increase in the price level:
A)increases output prices relative to input prices.
B)increases the profit margins of many producers.
C)increases RGDP supplied.
D)decreases unemployment rates.
E)does all of the above.

Question

Quizplus · Accepted Answer

In the short run, an increase in the price level can lead to higher output prices relative to input prices, increasing profit margins, which encourages producers to supply more, thus increasing RGDP supplied and potentially decreasing unemployment rates.

In the Short Run, an Increase in the Price Level