A Negative Shock to AD Will Cause the Inflation Rate

question 127

Multiple Choice

A negative shock to AD will cause the inflation rate to increase in:

• A) the short run only.
• B) the long run only.
• C) both the short run and the long run.
• D) neither the short run nor the long run.

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Definitions:

Import Quota

A restriction set by a government on the quantity of a certain good that can be imported into the country.

Welfare Outcomes

The effects of policies or economic conditions on the well-being and quality of life of individuals or populations.

Equivalent Tariff

A tariff level that would give the same protective effect to the domestic producers as a given non-tariff barrier does.

Yacht Industry

The sector of the economy that is involved in the design, construction, and sale of yachts, ranging from luxury to small racing models.