A Temporary Adverse Supply Shock Directly Causes

question 89

Multiple Choice

A temporary adverse supply shock directly causes

• A)a downward shift of the IS curve.
• B)a shift to the left of the FE line.
• C)a downward shift of the LM curve.
• D)an upward shift of the IS curve.

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Definitions:

Excise Tax

A tax levied on the sale of specific goods and services, such as tobacco, alcohol, and fuel.

Levied

Imposed or collected (usually a tax, fine, or other charge) by authority or force.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of demand to price changes.

Luxury Tax

A tax imposed on expensive goods and services considered to be non-essential or luxurious.