ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A supply shock is characterized by high inflation and lower output
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True
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False
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -Supply shocks cause relative price changes, not inflation.
Detailed explanation-2: -Cost-push inflation is associated with a supply shock-when one or more factors decrease aggregate supply and increase costs. The costs are reflected through higher prices for consumers, but it does not diminish aggregate demand. Cost-push inflation is one of the two types of inflation.
Detailed explanation-3: -Which of the following is true of a beneficial supply shock? It could lead to a lower price level.
There is 1 question to complete.