Suppose That in Response to an Adverse Aggregate Supply Shock

question 5

Multiple Choice

Suppose that in response to an adverse aggregate supply shock, the Bank of Canada increased the money supply. What would happen to unemployment and inflation?

• A) Unemployment and inflation would both rise.
• B) Unemployment and inflation would both fall.
• C) Unemployment would rise and inflation would fall.
• D) Unemployment would fall and inflation would rise.

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Definitions:

Social Problems

Issues within a society that are viewed by a significant number of people or key social institutions as being undesirable or harmful.

Societal Patterns

The recurrent and pervasive ways in which society is organized and functions, including norms, behaviors, and institutions.

Eighteenth Century

The period from 1701 to 1800, characterized by significant developments in the arts, science, and politics, often referred to as part of the Enlightenment era.

Nineteenth Century

The period of time extending from the year 1801 through 1900, characterized by significant industrial, social, and political changes globally.