If There Is a Temporary Adverse Supply Shock,then the Short-Run

question 57

Multiple Choice

If there is a temporary adverse supply shock,then the short-run Phillips curve shifts to the

• A)right.It remains to the right regardless of monetary policy.
• B)right.It remains to the right if the central bank pursues expansionary monetary policy.
• C)left.It remains to the left regardless of monetary policy.
• D)left.It remains to the left if the central bank pursues expansionary monetary policy.

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Definitions:

Break-even Point

The level of sales at which profit is zero.

Degree of Operating Leverage

A ratio that measures how a percentage change in sales will affect profits, highlighting the impact of fixed costs on earnings.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss for the business.

Variable Expenses

Costs that change in proportion to the activity or volume of operations in a business, such as raw materials and labor costs.