A Supply Shock That Reduces Labor Productivity

question 67

Multiple Choice

A supply shock that reduces labor productivity

• A)causes accelerating inflation if the Fed attempts to maintain the original output level.
• B)will increase real wages if nominal wages are flexible.
• C)will reduce the level of output at the natural level of real GDP even if employment does not decline.
• D)A and C.

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Definitions:

Self-Actualization Need

The desire to achieve one's full potential and realize one's abilities and qualities, considered the highest level in Maslow's hierarchy of needs.

Restless

A feeling of being unable to stay still or at ease, often leading to fidgeting or constant movement due to anxiety or boredom.

Discontent

A feeling of dissatisfaction or unhappiness with one's circumstances or environment.

Five-Need Hierarchy

A reference to Maslow’s hierarchy of needs, which outlines five levels of human needs from basic (physiological) to higher order (self-actualization).