Question

Economic expansions in Europe and China would cause:

a. the U.S. price level to fall and real GDP to rise
b. the U.S. price level to rise and real GDP to fall
c. the U.S. price level and real GDP to fall
d. the U.S. price level and real GDP to ris

Answer 1

Expansions in Europe and China would cause the U.S. price level to rise and real GDP to rise.

Step-by-step explanation:

Expansions in Europe and China would cause the U.S. price level to rise and real GDP to rise.

When Europe and China experience economic expansions, their increased demand for U.S. exports leads to a rightward shift in the U.S. aggregate demand (AD) curve. As a result, both the price level and real GDP in the U.S. increase.

Higher GDP would require more jobs, leading to a rise in U.S. employment as well.