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A negative supply shock causes output to _____ and the
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- Which of the following would properly be classified as a favorable supply shock? a)A hurricane hits a major city, destroying factories, roads, airports, and homes. Because the city was a major port and transportation hub, goods and services need to be rerouted, increasing transportation costs for firms nationwide. b)The interest rate decreases, spurring investment spending. c)There is a technological improvement that allows firms to reduce their costs of production permanently. d)There is an increase in government spending. e)The world price of oil increases rapidly without warning and is expected to remain at the new high level for many years, making it more expensive for all firms to produce goods and services.Which of the following would properly be classified as an unfavorable supply shock? a)The interest rate decreases, spurring investment spending. b)The government introduces a set of market reforms that strengthens property rights and makes it easier and safer for buyers and sellers to write contracts. c)The world price of oil increases rapidly without warning and is expected to remain at the new high level for many years, making it more expensive for all firms to produce goods and services. d)There is a technological improvement that allows firms to reduce their costs of production permanently. e)There is an increase in government spending.Which of the following would properly be classified as an unfavorable supply shock? a)The interest rate decreases, spurring investment spending. b) There is an increase in government spending. c)A hurricane hits a major city, destroying factories, roads, airports, and homes. Because the city was a major port and transportation hub, goods and services need to be rerouted, increasing transportation costs for firms nationwide. d)The government introduces a set of market reforms that strengthens property rights and makes it easier and safer for buyers and sellers to write contracts. e)There is a technological improvement that allows firms to reduce their costs of production permanently.
- Which is an example of a positive supply shock? Group of answer choices: Large decrease in input prices Strong collective bargaining from unions Strict environmental protection laws Larger increase in oil prices Suppose an economy experiences a positive supply shock. What is the short-run effect on output and the price level? Group of answer choices: Output and the price level both rise. Output and the price level both fall. Output rises and the price level falls. Output falls and the price level rises.Which of the following events would not involve a supply shock that would shift the aggregate supply curve? (i) The Cosatu union disintegrates and the minimum wage is abolished. (ii) African bank plc’s bad debt creates a financial crisis and that leads to reduction in money supply. (iii) 2016 drought destroys half of the crops farmed. (iv) A tax on sugar is levied on companies that produce sugary beverages. Group of answer choices Only ii and iv are correct. Only ii is correct. Only iii and iv are correct. Only i and ii are correct.economic forecasters had expected consumer spending to increase by 6 percent this year, but instead it increases by only 1 percent, this situation would be an example of a Group of answer choices negative demand shock positive demand shock negative supply shock positive supply shock
- An adverse or negative supply shock causes the aggregate __________ curve to shift to the ______________. Select one: a. demand; left b. supply; left c. demand; right d. supply; rightWhich of the following events will not cause a supply shock that would shift the aggregate supply curve? a.Tax for energy use introduced to help reduce global emissions b.natural disasters which destroys agricultural products c.adjustments in the interest rates for housing d.The OPEC cartel for oil prices collapses due to political disagreementsA favorable aggregate supply shock could result from: a.an increase in wages. b.a rapid rise in oil prices. c.an appreciation of the dollar d.a sharp rise in productivity.
- A permanent supply shock _________ potential output. A temporary supply shock shifts the short-run aggregate supply schedule, and __________ potential output. changes, does not change does not change, changes does not change, does not change changes, changesAn increase in the price level causes the aggregate supply curve to shift to another supply schedule. True or FalseClassify each of the following as a supply shock or a demand shock. Use a graph to show the effects on inflation and output in the short run and in the long run. Financial frictions increase. Steel workers go on strike for four weeks. Households and firms become more optimistic about the economy. Favorable weather produces a record crop of soybeans and cotton in the Midwest.