A Shock Increases the Costs of Production

question 13

Multiple Choice

A shock increases the costs of production.Given the effects of this shock,if the central bank wants to return the unemployment rate towards its previous level it would

• A)increase the rate at which the money supply increases.This will also move inflation closer to its previous rate..
• B)increase the rate at which the money supply increases.However,this will make inflation higher than its previous rate
• C)decrease the rate at which the money supply increases.This will also move inflation closer to its original rate
• D)decrease the rate at which the money supply increases.However,this will make higher than its previous rate.

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Definitions:

Hierarchy of Needs

A theory proposed by Abraham Maslow outlining a five-tier model of human needs, from basic physiological needs to self-actualization, each level needing to be fulfilled before moving to the next.

Cognitive Needs

Mental requirements essential for the growth and development of an individual, such as knowledge, comprehension, and curiosity.

Overprotected

A situation where an individual is shielded excessively from potential risks or harms, possibly hindering their development or independence.

Self-Actualization

The process of realizing and fulfilling one's potential, talents, and capabilities, considered the highest level of psychological development in Maslow's hierarchy of needs.