How Will a Favourable Supply Shock Shift the Short-Run Phillips

question 19

Multiple Choice

How will a favourable supply shock shift the short-run Phillips curve and how does it change inflation?

• A) It will shift the short-run Phillips curve right and raise inflation.
• B) It will shift the short-run Phillips curve right and lower inflation.
• C) It will shift the short-run Phillips curve left and raise inflation.
• D) It will shift the short-run Phillips curve left and lower inflation.

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Definitions:

Required Rate

The minimum annual percentage return that an investment must yield to be considered a viable option by an investor.

Constant Growth DDM

A valuation model that estimates the value of a dividend-paying stock by using predicted dividends that grow at a constant rate in perpetuity.

Intrinsic Value

The inherent or true value of a security, based on underlying assets and earnings, independent of its market value.

Dividends

Payments made by a corporation to its shareholder members, typically derived from the company's profits.