How are aggregate supply and stagflation related?
A. Stagflation usually causes an adverse shift in aggregate supply.
B. An adverse supply shift usually causes stagflation.
C. Stagflation only follows inflation, with no relation to aggregate supply.
D. There is no relationship between the two.
Answer: B
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Which of the following is not an example of the fallacy of composition?
a. If I can get to work fastest by taking the interstate, so can everyone else. b. If you can only get away from it all by going to Fairbanks, everyone who needs to get away should go to Fairbanks. c. If the quickest way to get off a sinking ship is to run to the nearest lifeboat, all the passengers should do this. d. If the best TV reception can be gotten with a Couch Potato antenna, then everyone should have a Couch Potato antenna. e. If I can get a better view by standing up at the baseball game, everyone gets a better view by standing up.
Economists use the term "ceteris paribus" to indicate that: a. the analysis is true for the individual but not for the economy as a whole
b. supply and demand are in balance. c. their conclusions are based on normative rather than positive economic analysis. d. other things are assumed to remain constant.
According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they
a. decreased the money supply. b. increased government expenditures. c. decreased taxes. d. None of the above is correct.
The most powerful individual in the Federal Reserve System is the
A. senior member of the Federal Open Market Committee. B. Superintendent of the Board of Governors. C. Chairman of the Federal Reserve Board. D. New York District Bank President.