Asked by Trinity McClendon on May 31, 2024
Verified
An adverse supply shock causes inflation to
A) rise and the short-run Phillips curve to shift right.
B) rise and the short-run Phillips curve to shift left.
C) fall and the short-run Phillips curve to shift right.
D) fall and the short-run Phillips curve to shift left.
Adverse Supply Shock
A sudden and significant decrease in the supply of a good or service, which typically leads to an increase in prices and can temporarily boost inflation.
Short-run Phillips Curve
A graphical representation showing the inverse relationship between the level of unemployment and the rate of inflation in an economy over the short-term.
Inflation
The degree of uptick in the universal valuation of goods and services, weakening purchase potency.
- Analyze the repercussions of supply variations on the economy's output, inflation, and the Phillips curve.
Verified Answer
Learning Objectives
- Analyze the repercussions of supply variations on the economy's output, inflation, and the Phillips curve.
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