In the short- run, an increase in the price of raw materials will the price level and
Real GDP.
A) lower; decrease
B) raise; increase
C) raise; decrease
D) lower; increase

Question

Quizplus · Accepted Answer

An increase in the price of raw materials affects the cost of production for firms, which can lead to a decrease in overall output and a higher price level due to higher input costs. Therefore, in the short-run, an increase in raw material prices will raise the price level and reduce real GDP.

In the Short- Run, an Increase in the Price of Raw