Which of the following is the best example of a supply shock?
A. Reductions in consumption spending triggered by a stock market crash.
B. The introduction of new innovations in production.
C. Increased government spending on education.
D. Planned improvements in energy production facilities.
Answer: B
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Unlike previous and future wars, the United States' federal government did not need to impose an income tax to finance the Civil War (1861–1865)
Indicate whether the statement is true or false
If two goods both had negative cross elasticities and negative income elasticities,
a. they are both normal and substitutes for one another. b. they are both normal and complements for one another. c. they are both inferior and substitutes for one another. d. they are both inferior and complements for one another.
If an externality is created by a single person or firm, and affects only a single person or firm, then
a. it is referred to as a single externality b. the inefficiency caused by that externality may be resolved by those two parties c. the externality takes the form of a side payment d. Pareto efficiency is guaranteed e. fairness dictates that the externality be removed
The only way to rationalize an upward slope for the short-run aggregate-supply curve is to argue that wages are sticky in the short run
a. True b. False Indicate whether the statement is true or false