We observe an increase in the price level and an increase in real GDP.Which of the following is a possible explanation?
A)an increase in factor prices
B)an increase in the quantity of capital
C)an increase in expected future profits
D)a decrease in the quantity of money
E)a decrease in expected future income

Question

Quizplus · Accepted Answer

An increase in expected future profits can lead to an increase in investment, which can increase real GDP. It can also lead to an increase in the demand for goods and services, which can lead to an increase in the price level.

We Observe an Increase in the Price Level and an Increase