Isolated Negative Aggregate Supply Shocks, in the Absence of Monetary

question 46

Multiple Choice

Isolated negative aggregate supply shocks, in the absence of monetary validation, will

• A)never be self- correcting without government policy to expand the money supply.
• B)be self- correcting only if the aggregate demand curve shifts.
• C)eventually be self- correcting as wages slowly fall.
• D)have no short- run or long- run effects.
• E)result in a permanent output gap.

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Definitions:

Opportunity Cost

The benefit that is missed or foregone when choosing one alternative over another.

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Inflation Rate

The growth rate in the average cost of goods and services in an economy over a certain duration.

Macroeconomist

An economist specializing in the study of large-scale economic factors and phenomena, including inflation, unemployment, and national income.