If There Is an Adverse Supply Shock

question 25

Multiple Choice

If there is an adverse supply shock,

• A)the labour demand curve would shift leftward and,for any real wage,firms would demand more labour.
• B)the labour demand curve would shift leftward and,for any real wage,firms would demand less labour.
• C)the labour demand curve would shift rightward and,for any real wage,firms would demand more labour.
• D)the labour demand curve would shift rightward and,for any real wage,firms would demand less labour.

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Definitions:

Leading Economic Indicator

A statistic about economic activities that helps analysts and policymakers predict future economic trends and business cycles.

Economic Activity

The actions that involve the production, distribution, and consumption of goods and services within an economy.

Aggregate Demand Curve

A graph that shows the relationship between the total quantity of goods and services demanded (from all sectors including household, business, and government) and the price level, all else being equal.

Price Level

A measure of the average of current prices across the entire spectrum of goods and services produced in the economy.