In the short run, an expansionary supply shock causes the average price level to _____ and the total output level to:
A) fall; rise.
B) fall; fall.
C) rise; rise.
D) rise; fall.

Question

Quizplus · Accepted Answer

An expansionary supply shock increases the supply of goods and services in the economy, leading to a decrease in the average price level (due to increased supply) and an increase in the total output level as producers are able to produce more.

In the Short Run, an Expansionary Supply Shock Causes the Average