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:

Aardvark Ltd

A hypothetical or specific company named Aardvark Ltd, without context its nature or industry cannot be defined.

Budgeted Production

The quantity of products that a company plans to produce over a specific period, often used for planning and resource allocation.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold or distributed to the end user.

Production Hold-Ups

Delays or interruptions in the manufacturing process that can lead to increased costs and extended production timelines.