Assume That the Economy Is Initially Operating at the Natural

Multiple Choice

Assume that the economy is initially operating at the natural level of output. An increase in the price of oil will cause which of the following in the medium run?

A) An increase in output and a decrease in the interest rate.
B) A decrease in unemployment, an increase in the nominal wage and an increase in the aggregate price level.
C) An increase in the interest rate.
D) An increase in the aggregate price level and no change in output.
E) A decrease in output and an increase in the aggregate price level.