When They Are Confronted with an Adverse Shock to Aggregate

question 23

Multiple Choice

When they are confronted with an adverse shock to aggregate supply,policymakers face a difficult choice in that

• A)if they contract aggregate demand,the unemployment rate will increase further.
• B)if they expand aggregate demand,the inflation rate will increase further.
• C)they face a less favorable trade-off between inflation and unemployment than they did before the shock.
• D)All of the above are correct.

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Definitions:

Mindfulness

The practice of being fully present and engaged in the moment, aware of one’s thoughts and feelings without judgment.

Positive Individual Trait

A characteristic or quality in a person that contributes to their overall positive perception and effectiveness in various aspects of life.

Agency

The capacity of individuals to act independently and make their own free choices, contrary to the forces of social structures.

Hope

People’s expectations that their goals can be achieved in the future.