An Accommodating Policy Response to a Supply Shock

question 105

Multiple Choice

An accommodating policy response to a supply shock

• A)reduces the expected inflation rate.
• B)maintains a fixed growth rate of nominal GDP.
• C)eliminates the additional inflation caused by the supply shock.
• D)none of these

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Definitions:

Endowment

The total resources available to an individual or entity, which can include wealth, assets, or resources in an economic context.

Normal Good

A type of good for which demand increases as the income of individuals increases, holding everything else constant.

Wage Rate

The standard amount of compensation given to employees for services rendered, usually expressed per hour or year.

Second Job

An additional employment undertaken by an individual besides their primary job to earn extra income or explore a different field.