Negative Supply Shocks Confront the Fed with a Dilemma Because

question 29

Multiple Choice

Negative supply shocks confront the Fed with a dilemma because

• A) full employment is no longer possible
• B) the costs of fulfilling one objective are paid in terms of failure to meet the other
• C) inflation cannot be prevented considering the reduced supply
• D) all policy choices are equally undesirable
• E) such shocks are entirely unpredictable

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