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A supply shock is a surprise occurrence that

a. either increases or decreases short-run aggregate supply and output.
b. temporarily reduces aggregate demand.
c. shifts the long-run aggregate supply curve to the right.
d. temporarily increases aggregate demand.

 

 

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Chika Ilonah
Chika IlonahLv10
5 Nov 2020

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Related questions

The economy is in short-run equilibrium when:

A) aggregate demand intersects short-run aggregate supply.

B) short-run aggregate supply intersects long-run aggregate supply.

C) aggregate demand intersects long-run aggregate supply.

D) aggregate demand intersects both long-run and short-run aggregate supply.

E) the economy is at full employment output.

Explain whether each of the following statements is true or false, justifying your response.

The short-run aggregate supply (SAS) curve slopes upward because households spend more as their incomes increase.

The long-run aggregate supply curve can never shift.

Either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left.

The Keynesian portion of the short-run aggregate supply (SAS) curve would be relevant during a recessionary situation.

Stagflation occurs when the aggregate demand (AD) curve shifts out on the upward sloping portion of the short-run aggregate supply (SAS) curve.

If aggregate demand shifts right then in the short run:

a. firms will increase production. In the long run, increased price expectations shift the short-run aggregate supply curve to the left.

b. firms will increase production. In the long run, increased price expectations shift the short-run aggregate supply curve to the right.

c. firms will decrease production. In the long run, increased price expectations shift the short-run aggregate supply curve to the left.

d. firms will decrease production. In the long run, increased price expectations shift the short-run aggregate supply curve to the right.

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