Question

Perfect summer weather increases farm output by 30%. in the short run, this can be expected to __________ the price level and __________ real wealth.

Answer 1

"Perfect summer weather increases farm output by 30%. in the short run, this can be expected to decrease the price level and increase real wealth."

The price level will decrease because there is much to offer as the weather increased the production. Although the price level is expected to lower, people will pay less for the product, the real wealth increases because the farm now has much more products and sells more, making more money. The farm increases in real wealth because is accumulating resources.