By Itself, a Supply Shock Such as a Hike in the Price

question 37

Multiple Choice

By itself, a supply shock such as a hike in the price of oil, can

• A) cause a wage-price spiral.
• B) not cause inflation.
• C) be inflationary as long as there is no policy response.
• D) cause real GDP to permanently decrease year after year.

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Definitions:

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, is able to elicit a conditioned response on its own.

UCS

stands for Unconditioned Stimulus, a term in classical conditioning that refers to a stimulus that elicits a natural, unconditioned response without prior learning.

CS

An acronym that stands for Conditioned Stimulus, a previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually comes to trigger a conditioned response.

CS

Stands for Conditioned Stimulus, an initially neutral stimulus that, after being associated with an unconditioned stimulus, triggers a conditioned response.