A Central Bank That Accommodates an Aggregate Supply Shock

question 22

Multiple Choice

A central bank that accommodates an aggregate supply shock

• A)increases the money supply,making the inflation rate rise.
• B)increases the money supply,making the inflation rate fall.
• C)decreases the money supply,making the inflation rate rise.
• D)decreases the money supply,making the inflation rate fall.

---

Definitions:

Variable Costs

Costs that vary directly with the level of production or output.

Output

The total amount of goods or services produced by a company, industry, or economy.

Marginal Product

The additional output generated by employing one more unit of a particular input, holding all other inputs constant.

Total Product

The overall quantity of output produced by a firm from a given quantity of inputs.