In the short run, an increase in the price level:
A)increases output prices relative to input prices.
B)increases the profit margins of many producers.
C)increases RGDP supplied.
D)all of the above

Question

In the short run, an increase in the price level:
A)​increases output prices relative to input prices.
B)​increases the profit margins of many producers.
C)​increases RGDP supplied.
D)​all of the above

Quizplus · Accepted Answer

An increase in the price level in the short run leads to an increase in output prices relative to input prices, which increases the profit margins of many producers. This can encourage firms to increase their production and supply more output, leading to an increase in real gross domestic product (RGDP) supplied. Therefore, all of the above options (A, B, and C) are correct.

In the Short Run, an Increase in the Price Level