If the Economy Experiences a Negative Supply Shock,which of the Following

question 176

Multiple Choice

If the economy experiences a negative supply shock,which of the following will be true?

• A)Inflation will rise,and real GDP will fall.
• B)Inflation will rise,and real GDP will rise.
• C)Inflation will fall,and real GDP will fall.
• D)Inflation will fall,and real GDP will rise.

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Definitions:

Foreign Subsidiary

A company located in another country that is directly controlled by another corporation.

Currency Exchange Rates

The value of one currency expressed in terms of another currency, used in global trade and finance to convert currencies for transactions.

Temporal Method

An accounting method used in translating foreign currency transactions and financial statements of foreign subsidiaries, using the exchange rates at the time the transactions occurred.

Remeasured Value

The adjusted value of an asset or liability based on changes in market conditions or currency exchange rates.