QuestionJuly 16, 2025

A negative supply shock that raises production costs will cause the A. aggregate supply curve to shift up. B. aggregate supply curve to she down. C. aggregate demand curve to shift left. D. aggregate demand curve to shift right. An upward shift in aggregate supply initially causes A. the inflation rate to rise and output to fall. B. the inflation rate to fall and output to fall. C. the inflation rate to fall and output to rise. D. the inflation rate to rise and output to rise. An upward shift in aggregate supply ultimately causes A. the inflation rate to fall and output to rise. B. the inflation rate to rise and output to remain unchanged. C. the inflation rate to remain unchanged and output to remain unchanged. D. the inflation rate to rise and output to rise.

A negative supply shock that raises production costs will cause the A. aggregate supply curve to shift up. B. aggregate supply curve to she down. C. aggregate demand curve to shift left. D. aggregate demand curve to shift right. An upward shift in aggregate supply initially causes A. the inflation rate to rise and output to fall. B. the inflation rate to fall and output to fall. C. the inflation rate to fall and output to rise. D. the inflation rate to rise and output to rise. An upward shift in aggregate supply ultimately causes A. the inflation rate to fall and output to rise. B. the inflation rate to rise and output to remain unchanged. C. the inflation rate to remain unchanged and output to remain unchanged. D. the inflation rate to rise and output to rise.
A negative supply shock that raises production costs will cause the
A. aggregate supply curve to shift up.
B. aggregate supply curve to she down.
C. aggregate demand curve to shift left.
D. aggregate demand curve to shift right.
An upward shift in aggregate supply initially causes
A. the inflation rate to rise and output to fall.
B. the inflation rate to fall and output to fall.
C. the inflation rate to fall and output to rise.
D. the inflation rate to rise and output to rise.
An upward shift in aggregate supply ultimately causes
A. the inflation rate to fall and output to rise.
B. the inflation rate to rise and output to remain unchanged.
C. the inflation rate to remain unchanged and output to remain unchanged.
D. the inflation rate to rise and output to rise.

Solution
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Answer

A. aggregate supply curve to shift up. ### A. the inflation rate to rise and output to fall. ### B. the inflation rate to rise and output to remain unchanged. Explanation 1. Identify the effect of a negative supply shock A negative supply shock increases production costs, causing the aggregate supply curve to shift up (Option A). 2. Determine initial effects of upward shift in aggregate supply An upward shift in aggregate supply initially leads to higher inflation rates and lower output due to increased production costs (Option A). 3. Assess ultimate effects of upward shift in aggregate supply Ultimately, an upward shift in aggregate supply results in higher inflation rates while output remains unchanged as the economy adjusts (Option B).

Explanation

1. Identify the effect of a negative supply shock<br /> A negative supply shock increases production costs, causing the aggregate supply curve to shift up (Option A).<br /><br />2. Determine initial effects of upward shift in aggregate supply<br /> An upward shift in aggregate supply initially leads to higher inflation rates and lower output due to increased production costs (Option A).<br /><br />3. Assess ultimate effects of upward shift in aggregate supply<br /> Ultimately, an upward shift in aggregate supply results in higher inflation rates while output remains unchanged as the economy adjusts (Option B).
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