An Adverse Supply Shock Will Shift Short-Run Aggregate Supply

question 131

Multiple Choice

An adverse supply shock will shift short-run aggregate supply

• A)right, making prices rise.
• B)left, making prices rise.
• C)right, making prices fall.
• D)left, making prices fall.

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Definitions:

Probability

A measure of the likelihood of a particular event occurring, ranging from 0 (impossible) to 1 (certain).

Expected Utility Function

A theoretical concept used in economics to model the decision-making process under uncertainty, where individuals choose actions to maximize their expected utility.

Wealth

The total value of all financial assets and tangible possessions owned by an individual or entity, minus any debts.

Von Neumann-Morgenstern Utility Function

A mathematical representation of an individual's preference over a set of alternatives, based on the assumption of expected utility maximization.