There Is a Temporary Adverse Supply Shock

question 37

Multiple Choice

There is a temporary adverse supply shock.Given the effects of this shock,if the central bank chooses to return unemployment closer to its previous rate it would

• A)raise the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve right.
• B)raise the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve left.
• C)reduce the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve right.
• D)reduce the rate at which it increases the money supply.In the long run this will shift the short-run Phillips curve left.

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Definitions:

Wages

Wages are payments made to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Factors of Production

The inputs used in the production of goods or services in the process of creating economic value; these typically include land, labor, capital, and entrepreneurship.

Monopsony Firm

A market situation where there is only one buyer or a dominant buyer for a product or service, giving that buyer substantial control over market prices and terms.

Competitive Firm

A business that operates in a market with many buyers and sellers, where no single entity can significantly influence the market price of goods and services.