There Is a Temporary Adverse Supply Shock

question 37

Multiple Choice

There is a temporary adverse supply shock.Given the effects of this shock,if the central bank chooses to return unemployment closer to its previous rate it would

• A)raise the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve right.
• B)raise the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve left.
• C)reduce the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve right.
• D)reduce the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve left.

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Definitions:

Merchandise

Goods that are purchased for resale at a profit; the main product that a retailer sells.

Sales on Account

Transactions where goods are sold and payment is deferred to a future date; this is typically tracked through accounts receivable.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, before any purchases or sales have occurred.

Projected Sales

An estimate of the amount of revenue that a company expects to earn in a future period from the sale of goods or services.