a favorable supply shock will cause the price level

Save. An increase in the U.S. interest rate A. shifts money demand to the right. A favorable supply shock will cause the price level a. and output to rise. b. unemployment to rise and the short-run Phillips curve to shift left. C. raises the opportunity cost of holding dollars. These structural changes are most likely to be responsible for supply shocks in industries with a few large players: One or more of the major firms involved in producing the commodity goes bankrupt, or there is an accident that renders it unable to provide the commodity. The interest rate rises back to its initial level (i 0) and the level of output falls back to its initial level (Y n). Since the decrease in the price of the raw material encourages producers to increase their production, labor demand increases. 答案选项组 . A negative aggregate supply shock will result in which of the following in the short run? This involves either a sudden increase in supply or a sudden decrease. fall. Problem : Explain the chain of events that causes the aggregate demand curve to be upward sloping according to the imperfect- information model. The extent of crowding out, for any particular level of the price level, is: a. the horizontal distance between the curves MD1 and MD2. Play this game to review Economics. 2. You will also be able to analyze how shocks to either aggregate demand or aggregate supply affect real GDP and the aggregate price level as the economy moves to a new macro equilibrium. not change. c. to rise and output to fall. The shift in demand will have an effect on the price level and national output, but the effects may not be uniform because aggregate supply (AS) may not be linear. It is … Adverse supply shocks shift Aggregate Supply (AS) to the left. a. An adverse supply shock is often (but not always) a natural event. b. and prices to fall. B. induces households to increase consumption. d. to fall and output to rise. Supply shocks can also cause recessions, but these recessions tend to be accompanied by a combination of rising unemployment and accelerating inflation. b. unemployment to rise and the short-run Phillips curve to shift left. b. and output to fall. A positive supply shock … d. to fall and output to rise. The following are illustrative examples. University. An expansionary shock may result from a decrease in the price of some input factor. 115. The price level rises, causing the interest rate to fall. A favorable supply shock will cause: a. unemployment to rise and the short-run Phillips curve to shift right. Suppose that there is an adverse supply shock. 2. Which of the following would cause the price level to rise and output to fall in the short run? The most likely result of the government's tax decrease is: a. a decrease in unemployment and an increase in the aggregate price level. Supply Shock. The price level will have gone up: ... Changes in the global economy can also cause supply shocks that trigger inflation. d. to fall and prices to rise. Topics include AD shocks, such as changes in consumption, investment, government spending, or net exports, and supply shocks such as price surprises that impact SRAS, and how changes in either of these impact output, unemployment, and the price level. TYPE: M DIFFICULTY: 1 SECTION: 22.3 116. c. unemployment to fall and the short-run Phillips curve to shift right. Price will be lower (P1) and actual output (Y) … Definition of Supply Shock: A supply shock is an unexpected event that results in a dramatic change in the supply of a commodity, which in turn swiftly results in a change in the commodity’s price. Principles of Macroeconomics Detailed Explanation: Supply shocks may be brought on by sudden events such as natural disasters, wars, terrorism, or political decisions. Which of the following viewpoints uses the Phillips curve? 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