In the short run, a price increase in the goods and services market measured by the CPI will:
A) increase the purchasing power of money.
B) improve producer profits and, thereby, induce suppliers to expand output.
C) increase resource prices, lower profits, and lead to a decline in output.
D) reduce the natural rate of unemployment.

Question

Quizplus · Accepted Answer

In the short run, a price increase can improve producer profits as prices rise faster than costs, encouraging suppliers to expand output.

In the Short Run, a Price Increase in the Goods