An Adverse Supply Shock Would Shift

question 44

Multiple Choice

An adverse supply shock would shift:

• A)only the short-run aggregate supply curve outward.
• B)only the long-run aggregate supply curve outward.
• C)only the long-run aggregate supply curve inward.
• D)only the short-run aggregate supply curve inward.
• E)both the long-run and the short-run aggregate supply curves inward.

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Definitions:

Clear

in an economic or financial context often means to settle a transaction or complete a trade or payment process.

Federal Reserve's Assets

These are financial assets held by the Federal Reserve Bank, including government securities, mortgage-backed securities, and loans to banks.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Required Reserve Ratio

The fraction of deposits that a bank is required by regulation to hold in reserve, not loaning them out, ensuring banks can meet their depositor's demands.