Suppose Oil Prices Rise and Short-Run Aggregate Supply Decreases

Multiple Choice

Suppose oil prices rise and short-run aggregate supply decreases. If the Fed responds by increasing the quantity of money, then in the short run

A) real GDP increases and the price level falls.
B) real GDP increases and the price level rises even higher.
C) the Fed is more concerned about fighting inflation than unemployment.
D) None of the above answers is correct.