Suppose a major hurricane devastates a large region of the US At the same time,

Question

Suppose a major hurricane devastates a large region of the US At the same time, there are major Increases in criminal activity that diminish income and large levels of bank fraud that lead to higher interest rates. What will happen? the Overall level of output will fall but the Impact on the price level is ambiguous The overall level of output and price level will fail The overall Impact on output and the price level is ambiguous The impact to the overall level of output to ambiguous, but price level will fall The overall level of output will fall but price level will rise

Explanation / Answer

The correct choice is E

Explanation : - Due to the impact suffered by the hurricane, the overall production level of goods and services will fall because the necessary infrastructure required to produce the goods and services remains damaged due to the Hurricane . The fall in the output level coupled with high criminal activity, large levels of bank fraud and higher interest rates leads to rise in the price level of goods and services .

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