Describe each of the following as a positive demand shock, a negative demand shock, a positive supply shock, or a negative supply shock, and specify how each are represented on the Phillips curve

a. a sudden increase in oil prices
b. a large increase in spending on residential construction
c. a sudden decrease in household wealth resulting from a stock market crash
d. a substantial increase in productivity following technological advancements


a. A sudden increase in oil prices is a negative supply shock, represented by an upward shift of the Phillips curve.
b. A large increase in spending on residential construction is a positive demand shock, represented by a movement up along the Phillips curve.
c. A sudden decrease in household wealth resulting from a stock market crash is a negative demand shock, represented by a movement down along the Phillips curve.
d. A substantial increase in productivity following technological advancements is a positive supply shock, represented by a downward shift of the Phillips curve.

Economics

You might also like to view...

Refer to the table above. When does diminishing marginal returns to capital set in?

A) When the second machine is used B) When the third machine is used C) When the fourth machine is used D) When the fifth machine is used

Economics

The value of the estimated transformation parameter in generalized least square estimation that eliminates serial correlation in error terms indicates whether the estimates are likely to be closer to the pooled OLS or the fixed effects estimates.

Answer the following statement true (T) or false (F)

Economics

The centering of explanatory variables about their sample averages before creating quadratics or interactions forces the coefficient on the levels to be average partial effects.?

Answer the following statement true (T) or false (F)

Economics

If Larry starts a new pizza parlor and hires a manager for $30,000 per year, this implies that

A. the price of pizza will increase if Larry works in the parlor himself. B. Larry values his labor at more than $30,000 per year. C. pizza parlor managers are inexpensive to hire. D. Larry values his labor at less than $30,000 per year.

Economics