There Is an Adverse Supply Shock

question 18

Multiple Choice

There is an adverse supply shock.In response the Federal Reserve pursues an expansionary monetary policy.Taking into account both the shock and the Federal Reserve's policy,which of the following are we sure of?

• A)unemployment will be higher
• B)unemployment will be lower
• C)inflation will be higher
• D)inflation will be lower

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Definitions:

Federal Government

The national government of a federated state, which holds authority over matters that transcend regional or state boundaries, often sharing power with state or provincial governments.

Red Scare

Periods of intense fear of communism and radical political agitation in the United States, particularly prevalent after both World Wars.

Antiradicalism

opposition to radical movements, ideologies or persons, often in the context of politics, where conservative segments of society reject progressive or revolutionary changes.

Immediate Aftermath

The period immediately following an event, characterized by reactions, consequences, and initial responses to what has occurred.