Which of the Following Is True for an Economy That

question 26

Multiple Choice

Which of the following is true for an economy that has experienced a temporary supply shock?

• A) The supply shock is likely to have shifted the short-run aggregate supply curve to the right.
• B) There is likely to be a fall in inflationary expectations in the economy.
• C) Short-run macroeconomic equilibrium will consist of lower GDP and higher inflation.
• D) The central bank is likely to reduce interest rates to bring the inflation rate down.

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Definitions:

Punjab Hills

A region in India known for its diverse topography, culture, and history, including many hill stations and historical sites.

Hindu God

Deities worshipped in Hinduism, each with distinct roles, attributes, and stories that are central to the religion's cosmology.

Hindu Painter

Refers to artists primarily from the Indian subcontinent, known for their intricate, colorful, and often religious artwork following Hindu themes and deities.

Bichitr

A painter in the Mughal court of India known for his miniatures, particularly skilled in portraiture.