Which of the Following Would Cause the Price Level to Rise

question 36

Multiple Choice

Which of the following would cause the price level to rise and output to fall in the short run?

• A)an increase in the money supply
• B)a decrease in the money supply
• C)an adverse supply shock
• D)a favorable supply shock

---

Definitions:

Unit Costs Decreasing

A situation indicating that the expense incurred to produce a single unit of output is declining, often due to efficiencies or increased production scale.

Lowest Gross Profit

The smallest amount of profit generated from selling goods or services, calculated by subtracting the cost of goods sold from sales revenue.

Raw Materials

Basic substances in their natural, modified, or unprocessed states used in the production or manufacturing of goods.

Operating Expense

The costs associated with the day-to-day operations of a business, excluding the costs of goods sold.