Which of the following will most likely accompany an unanticipated increase in short-run aggregate supply?
A) an increase in real GDP
B) an increase in the general level of prices
C) an increase in the actual rate of unemployment
D) an increase in the natural rate of unemployment

Question

Quizplus · Accepted Answer

An unanticipated increase in short-run aggregate supply means that firms are producing more output at the current price level. This would lead to an increase in real GDP, as output and income are positively correlated in the short run. Option B is incorrect because an increase in the general level of prices would only occur if there was an increase in aggregate demand, not aggregate supply. Option C is incorrect because an increase in short-run aggregate supply would lead to a decrease in the actual rate of unemployment, as firms are producing more and hiring more workers. Option D is incorrect because the natural rate of unemployment is determined by structural factors and does not change due to short-run fluctuations in aggregate supply.

Which of the Following Will Most Likely Accompany an Unanticipated