In the short run,the price level
A) will decrease if unit costs and markups both increase throughout the economy
B) will remain stable if unit costs increase throughout the economy
C) is unimportant in macroeconomics
D) will increase if unit costs increase throughout the economy
E) is determined by the Fed.

Question

Quizplus · Accepted Answer

In the short run, an increase in unit costs throughout the economy will lead to an increase in the price level. This is because an increase in unit costs leads to higher production costs for firms, which they will pass on to consumers through higher prices. Therefore, option D is the correct choice.

In the Short Run,the Price Level