An increase in the price level and a reduction in output would result from
A)a fall in stock prices.
B)natural disasters such as hurricanes, floods, and droughts.
C)declining government expenditures.
D)tax rebates.

Question

Quizplus · Accepted Answer

Natural disasters such as hurricanes, floods, and droughts disrupt production, reduce supply, and increase costs, which results in an increase in the price level and a reduction in output. The other options are not likely to result in such an outcome.

An Increase in the Price Level and a Reduction in Output