Which of the following is most likely to result from an unanticipated increase in short-run aggregate supply due to favorable weather conditions in agricultural areas?
A)an increase in the inflation rate
B)an increase in the unemployment rate
C)a decrease in the price level
D)a decrease in the natural rate of unemployment

Question

Quizplus · Accepted Answer

An unanticipated increase in short-run aggregate supply due to favorable weather conditions in agricultural areas would result in an increase in the output of agricultural goods, thereby decreasing their prices. This, in turn, would lead to a decrease in the overall price level in the economy. The increase in aggregate supply would not lead to an increase in the inflation rate or the unemployment rate, nor would it affect the natural rate of unemployment in the short run.

Which of the Following Is Most Likely to Result from an Unanticipated