QuestionJune 4, 2025

Which of these is a negative real shock that occurred during the Great Recession? A stock market crash decreased consumer wealth. Widespread shadow bank failures led to a reduction in the productivity of financial intermediation. The Smoot-Hawley Tariff led to a decrease in net exports. Bank failures led to a decrease in the money supply.

Which of these is a negative real shock that occurred during the Great Recession? A stock market crash decreased consumer wealth. Widespread shadow bank failures led to a reduction in the productivity of financial intermediation. The Smoot-Hawley Tariff led to a decrease in net exports. Bank failures led to a decrease in the money supply.
Which of these is a negative real shock that occurred during the Great Recession?
A stock market crash decreased consumer wealth.
Widespread shadow bank failures led to a reduction in the productivity of financial intermediation.
The Smoot-Hawley Tariff led to a decrease in net exports.
Bank failures led to a decrease in the money supply.

Solution
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Answer

Widespread shadow bank failures led to a reduction in the productivity of financial intermediation. Explanation 1. Identify Negative Real Shock A negative real shock affects the economy's productive capacity or efficiency, not just financial variables. 2. Analyze Options - "A stock market crash decreased consumer wealth" affects wealth, not productivity. - "Widespread shadow bank failures led to a reduction in the productivity of financial intermediation" directly impacts productivity. - "The Smoot-Hawley Tariff led to a decrease in net exports" is a trade policy impact, not a productivity shock. - "Bank failures led to a decrease in the money supply" affects monetary conditions, not real productivity.

Explanation

1. Identify Negative Real Shock<br /> A negative real shock affects the economy's productive capacity or efficiency, not just financial variables.<br /><br />2. Analyze Options<br /> - "A stock market crash decreased consumer wealth" affects wealth, not productivity.<br /> - "Widespread shadow bank failures led to a reduction in the productivity of financial intermediation" directly impacts productivity.<br /> - "The Smoot-Hawley Tariff led to a decrease in net exports" is a trade policy impact, not a productivity shock.<br /> - "Bank failures led to a decrease in the money supply" affects monetary conditions, not real productivity.
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