The Long-Run Adjustment to a Negative Supply Shock Results in

question 137

Multiple Choice

The long-run adjustment to a negative supply shock results in

• A)the short-run aggregate supply curve shifting to the right.
• B)the price level rising.
• C)unemployment rising.
• D)workers being willing to accept higher wages.

Explain how the PPF illustrates the trade-offs between producing different combinations of goods.

Understand how efficiency and inefficiency are depicted by the PPF.

Associate the production of specific goods with points on the PPF, understanding opportunity costs related to varying production levels.

Comprehend the relationship between unemployment and the PPF.

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision making by reducing complex problem-solving to simpler judgment processes.

Cost-benefit Impact

An assessment that compares the costs involved in an action to the benefits derived from it, used to determine its overall value and feasibility.

Escalating Cost Impact

The effect of costs increasing over time, often spiraling beyond original estimates, generally due to poor planning, scope creep, or unforeseen circumstances.

Satisficing

A decision-making strategy that involves searching for and choosing an acceptable or satisfactory response to a problem or scenario, rather than an optimal solution.