A Favorable Supply Shock Causes the Price Level to

question 25

Multiple Choice

A favorable supply shock causes the price level to

• A)rise.To counter this a central bank would increase the money supply.
• B)rise.To counter this a central bank would decrease the money supply.
• C)fall.To counter this a central bank would increase the money supply.
• D)fall.To counter this a central bank would decrease the money supply.

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Definitions:

Plant Expansion

The process of increasing the physical size or production capacity of a manufacturing facility or plant.

Monetary Resources

Financial assets or liquid assets available to a business or individual, including cash, bank deposits, and investments.

Operations Changes

Refers to alterations in the business processes or activities that can impact a company’s performance or strategy.

Reorganization Cost

Expenses associated with restructuring a company, which might include legal fees, severance pay, and costs for dismantling and reassembling departments.