If Inflation Turns Out to Be Higher Than Expected,this Will

question 68

Multiple Choice

If inflation turns out to be higher than expected,this will

• A) shift long-run aggregate supply to the right.
• B) shift long-run aggregate supply to the left.
• C) shift short-run aggregate supply to the left.
• D) shift short-run aggregate supply to the right.
• E) have no effect on aggregate supply.

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Definitions:

Moral Hazard

The situation where one party is more likely to take risks because another party bears the cost of those risks.

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to participate in a contract or agreement, potentially leading to market inefficiency.

Life Insurance

A contract between an insurer and a policyholder where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.

Productivity

A measure of the efficiency of a person, machine, system, etc., in converting inputs into useful outputs.