If There Is an Adverse Supply Shock, Which of the Following

question 29

Multiple Choice

If there is an adverse supply shock, which of the following will most likely happen?

• A)The aggregate supply curve and the short-run Phillips curve will both shift right.
• B)The aggregate supply curve and the short-run Phillips curve will both shift left.
• C)The aggregate supply curve will shift right, and the short-run Phillips curve will shift left.
• D)The aggregate supply curve will shift left, and the short-run Phillips curve will shift right.

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Definitions:

Cash-flow Hedge

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with an asset or liability or a forecasted transaction.

Purchase Order

An official document issued by a buyer committing to pay the seller for the sale of specific products or services.

Fair-value Hedge

A hedge of the exposure to changes in the fair value of an asset or liability or an unidentified firm commitment that could affect profit or loss.

Drilling Machine

A tool used for making holes in various materials, part of machinery equipment.