Assume that the economy is initially operating at the natural level of output. A simultaneous expansionary monetary policy and an increase in oil prices will cause which of the following?
A) an increase in output and a reduction in the interest rate in the short run.
B) a reduction in output and an increase in the interest rate in the short run.
C) a reduction in output and a reduction in the interest rate in the short run.
D) an ambiguous effect in output and an increase in the price level in the short run.
E) an ambiguous effect in output and a reduction in the price level in the short run.