Which of the Following Would Cause the Price Level to Fall

question 15

Multiple Choice

Which of the following would cause the price level to fall and output to rise 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

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Definitions:

Variable Overhead Rate

A measure used to estimate the variable costs that a business incurs during the production of a good or service.

Direct Labor Hours

The amount of time spent by workers directly involved in manufacturing a product.

Direct Materials

Raw materials that can be directly linked to the production of specific goods or services in a manufacturing process.

Fluid Ounces

A unit of volume used primarily in the United States to measure liquids, equivalent to approximately 29.57 ml.