After an unexpected ________ in the price of oil,the long-run adjustment decreases the price level and ________ the unemployment rate as they return to their original levels.
A)increase; increases
B)increase; decreases
C)decrease; increases
D)decrease; decreases

Question

Quizplus · Accepted Answer

An unexpected increase in the price of oil can initially lead to higher inflation and potentially higher unemployment due to cost-push inflation. However, in the long run, the economy adjusts, and both the price level and the unemployment rate tend to return to their original levels, with the unemployment rate decreasing as the economy recovers.

After an Unexpected ________ in the Price of Oil,the Long-Run