The short-run effect of a negative supply shock is
A) lower inflation and a declining output gap.
B) lower inflation and an increasing output gap.
C) higher inflation and a declining output gap.
D) higher inflation and an increasing output gap.
C
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Compared to the closed economy Keynesian model, the open economy model in which imports are a function of income has an investment multiplier that is
a. smaller. b. larger. c. equal. d. equal to 1.
Which of the following transfer programs in the U.S. is funded by a national tax but administered by state governments?
a. Social security b. Veterans' Administration Benefit program c. Unemployment insurance d. Food stamps e. National Guard activities
Jessica owns a company that makes pre-packaged sandwiches for convenience stores. The market price for a sandwich is $5 and Jessica is a price-taker. Her daily variable cost for making sandwiches is C(Q) = 2.5Q + (Q2/40) and her marginal cost is MC = 2.5 + (Q/20). She is currently producing sandwiches according to the quantity rule. What should Jessica do if she has an avoidable fixed cost of $50 a day?
A. She should keep producing sandwiches because the price is greater than the minimum of average fixed cost. B. She should keep producing sandwiches because she is maximizing profit at the current quantity. C. She should shut down production because the price is greater than the minimum of average cost. D. She should shut down production because the fixed cost can be avoided if she does.
Someone who has been temporarily laid off and is looking for work in the meantime is known as a ______.
a. job loser b. job leaver c. reentrant d. new entrant