A Favorable Supply Shock Causes Output to

question 32

Multiple Choice

A favorable supply shock causes output to

• A)rise.To counter this a central bank would increase the money supply.
• B)rise.To counter this a central bank would decrease the money supply.
• C)fall.To counter this a central bank would increase the money supply.
• D)fall.To counter this a central bank would decrease the money supply.

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Definitions:

Debt-equity Ratio

A financial metric assessing a corporation's leverage, obtained by dividing all liabilities by the equity held by shareholders.

Semi-annually

Occurring or calculated twice a year, typically in the context of interest payments or other financial evaluations.

Market Value

The price at which trading of a service or asset is currently occurring in the market.

Cost of Equity

A theoretical payment made by a corporation to its stockholders to reward them for the risk involved in investing their funds.