A Negative Short-Run Supply Shock _____ Aggregate Output and _____

question 230

Multiple Choice

A negative short-run supply shock _____ aggregate output and _____ the aggregate price level.

• A) reduces; increases
• B) increases; reduces
• C) reduces; reduces
• D) increases; increases

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Definitions:

Daily Payments

Payments made on a daily basis, often used in the context of loans or labor wages.

Loan

Money that is borrowed and should be returned with added interest.

Compounded Continuously

The process whereby interest is calculated on an initial principal and subsequently on the accumulated interest of previous periods, assuming the compounding occurs infinitely within a given time.

Effective Annual Rate

The actual interest rate an investment, loan, or savings account will yield after accounting for compounding.