Suppose the U

question 88

Multiple Choice

Suppose the U.S. economy is operating at potential output. A negative supply shock that is accommodated by an open market purchase by the Federal Reserve will cause ________ in real GDP in the long run and ________ in inflation in the long run,everything else held constant.

• A)no change;an increase
• B)no change;a decrease
• C)an increase;an increase
• D)a decrease;a decrease

---

Definitions:

Noncorporate Businesses

Businesses that are not incorporated and typically include sole proprietorships, partnerships, and family-owned entities.

Imports

Goods or services brought into one country from another for the purpose of trade.

Exports

Goods and services produced in one country and sold to buyers in another, contributing to the exporting nation's GDP.

Net National Product

The total market value of all goods and services produced by the residents of a country, adjusted for depreciation.