A Negative Supply Shock Causes

question 176

Multiple Choice

A negative supply shock causes

• A) falling average prices.
• B) increased real GDP.
• C) decreased unemployment.
• D) stagflation.
• E) none of the above.

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Definitions:

Variable Factory Overhead

Variable factory overhead consists of production costs that vary with the level of output, such as utilities and indirect materials.

Fixed Costs

Costs that tend to remain the same in amount, regardless of variations in the level of activity.

Differential Revenue

The additional revenue generated from choosing one alternative over another in decision-making processes.

Domestic Unit Sales

The quantity of product units sold within a company's home country.