A favorable supply shock causes the price level to

A) rise.To counter this a central bank could increase the money supply.
B) rise.To counter this a central bank could decrease the money supply.
C) fall.To counter this a central bank could increase the money supply.
D) fall.To counter this a central bank could decrease the money supply.

Favorable Supply Shock

An unexpected event that increases the supply of a product or service, leading to lower prices and benefiting consumers.

Price Level

A measure of the average prices of goods and services in an economy.

Central Bank

A national bank that provides financial and banking services for its country's government and commercial banking system and implements monetary policy.