In Response to an Adverse Supply Shock,suppose the Fed Implements

question 11

Multiple Choice

In response to an adverse supply shock,suppose the Fed implements accommodating monetary policy.Which of the following occurs as a result of the accommodating monetary policy?

• A)Aggregate demand shifts to the left,which increases inflation and increases unemployment in the short run.
• B)Aggregate demand shifts to the left,which decreases inflation and increases unemployment in the short run.
• C)Aggregate demand shifts to the right,which increases inflation and increases unemployment in the short run.
• D)Aggregate demand shifts to the right,which increases inflation and decreases unemployment in the short run.

---

Definitions:

Joint Stock Company

A type of business entity owned by shareholders where the stock can be bought and sold on stock exchanges.

Perpetual Existence

A corporate structure characteristic where a company continues indefinitely, unless dissolved, regardless of changes in ownership or management.

Implied Duration

Estimated time that represents how long it takes for the price of a fixed-income investment to be repaid by its internal cash flows.

Business Trust

A legal arrangement where assets are managed by trustees for the benefit of the trust's beneficiaries, often used in business for tax and estate planning.