A Shock Increases the Costs of Production

question 120

Multiple Choice

A shock increases the costs of production. Given the effects of this shock, if the central bank wants to return the unemployment rate toward its previous level it would

• A)increase the rate at which the money supply increases.This will also move inflation closer to its previous rate.
• B)increase the rate at which the money supply increases.However, this will make inflation higher than its previous rate.
• C)decrease the rate at which the money supply increases.This will also move inflation closer to its original rate.
• D)decrease the rate at which the money supply increases.However, this will make higher than its previous rate.

Recognize the purpose and process of conducting a value chain analysis.

Identify factors that contribute to a firm's cost advantage or differentiation advantage.

Understand the strategic priority of value chain activities in achieving competitive advantage.

Comprehend the relationship between efficiency in value chain activities and competitive advantage.

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Definitions:

Supply Increased

A situation in which the quantity of a good or service that producers are willing and able to offer for sale rises, possibly leading to lower prices.

Demand Increased

A situation where the desire or need for a product or service rises, leading to potentially higher prices and/or increased production.

Quantity Demanded

The overall volume of a good or service that individuals are prepared and capable of buying at a given price.

Demand Decreased

A situation where the desire or need for a particular product or service declines.