When Faced with Negative Supply Shocks, Policymakers

question 100

Multiple Choice

When faced with negative supply shocks, policymakers:

• A)Will stabilize both inflation and output
• B)Will always focus on stabilizing output
• C)Cannot stabilize output so they tend to focus on inflation
• D)Face a trade-off because they cannot simultaneously stabilize both output and inflation

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Definitions:

New Ideas

Fresh and original concepts, thoughts, or approaches that have not been previously considered or explored.

Defer Judgment

The practice of postponing evaluation or critical thinking about ideas or situations in order to explore all possibilities without bias.

Osborn

Refers to Alex Osborn, the advertising executive and author who coined the term "brainstorming" and developed techniques to foster creative thinking.

Lateral Thinking

A problem-solving method that encourages creativity and looking at situations from different perspectives.