Exhibit: Supply Shock in This Graph, Assume That the Economy

question 76

Multiple Choice

Exhibit: Supply Shock In this graph, assume that the economy starts at point A, and there is a favourable supply shock that does not last forever. In this situation, point _____ represents short-run equilibrium, and point _____ represents long-run equilibrium.

• A)B; C
• B)B; A
• C)E; D
• D)E; A

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Definitions:

Annually Compounded

The process where interest is added to the principal sum of a loan or deposit once a year.

Rate of Return

The increase or decrease in the value of an investment during a set timeframe, shown as a percentage of the investment's starting price.

Portfolio

A collection of investments held by an individual or institution, including stocks, bonds, real estate, and other assets.

Successive Years

Consecutive years following one after the other without interruption.