What Impact Will a Negative Supply Shock Have on the Main

question 92

Multiple Choice

What impact will a negative supply shock have on the main measures of economic performance?

• A) Real GDP will increase, inflation will increase, and unemployment will decrease
• B) Real GDP will decrease, inflation will decrease, and unemployment will increase
• C) Real GDP will decrease, inflation will increase, and unemployment will increase
• D) Real GDP will increase, inflation will decrease, and unemployment will decrease

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Definitions:

Profit Maximizing

The process by which a firm determines the price and output level that returns the greatest profit.

Marginal Revenue Curve

A graphical representation that shows the change in total revenue for every unit increase in the quantity of output sold.

Demand Curve

A graphical representation showing the relation between the price of a good and the quantity demanded by consumers.

Profit Maximizing

is a strategy where a firm decides on the quantity of production and price to maximize its profit.