If oil prices increase, then in the short run, real GDP will ________ and the price level will ________.
A) increase; rise
B) increase; fall
C) decrease; rise
D) decrease; fall

Question

Quizplus · Accepted Answer

In the short run, an increase in oil prices typically leads to higher production costs for many goods and services, which can slow down economic activity (decreasing real GDP) and lead to higher prices (rising price level) due to the increased costs being passed on to consumers.

If Oil Prices Increase, Then in the Short Run, Real