A Negative Real Shock Is Often Amplified,creating Short-Run Aggregate Supply

question 41

Multiple Choice

A negative real shock is often amplified,creating short-run aggregate supply and aggregate demand shocks due to:

• A) sticky wages and flexible prices.
• B) flexible wages and sticky prices.
• C) sticky wages and prices.
• D) flexible wages and prices.

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Definitions:

Expected Return

The forecasted amount of profit or loss an investment is projected to generate, expressed as a percentage of the total invested capital.

Portfolio Weight

The percentage composition of a particular holding in relation to the total value of the portfolio, used to assess diversification and risk.

Security Market Line

A graphical representation in financial market theory that depicts the relationship between risk (measured as beta) and expected return for the entire market.

Beta

A way of measuring the level of erratic behavior, or systemic threat, in a security or investment group in perspective of the general market.