Suppose There Is a Temporary Supply Shock Because of a War

question 63

Multiple Choice

Suppose there is a temporary supply shock because of a war in the Middle East,then,ceteris paribus,the ensuing cost push shock ________.

• A)would lead to a temporary increase in prices but a permanent reduction in output
• B)would lead to a temporary increase in output but a permanent increase in inflation
• C)would lead to a temporary decrease in output but a permanent increase in inflation
• D)all of the above
• E)none of the above

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Definitions:

Teratogen

Any agent or substance that can cause malformation or serious developmental abnormalities in an embryo or fetus.

WIC Program

A federal assistance program in the United States providing nutrition education and food vouchers for pregnant women, postpartum women, and young children.

Food Staples

Basic and essential food items that are consumed regularly and in large volumes, forming the foundation of the traditional diet in a given culture or community.

Calories Per Day

A measure of energy intake, indicating the number of calories a person needs to consume daily to maintain their current weight.