Economic expansions in Europe and China would cause

Question

a.

the U.S. price level to rise and real GDP to fall.
b.

the U.S. price level and real GDP to rise.
c.

the U.S. price level to fall and real GDP to rise.
d.

the U.S. price level and real GDP to fall.

Answer 1

Economic expansions in Europe and China are likely to increase demand for U.S. exports, boost investment, and potentially lead to increased consumer spending due to positive economic conditions globally. This increased demand can result in higher production levels in the U.S., which would likely lead to a rise in both the price level and real GDP.

Given this analysis, the correct answer is:

b. the U.S. price level and real GDP to rise.